dax risk of a minor pull back before new potential upleg 2684042017

Short-term Technical Outlook (Wed, 04 Jan 2016)

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has started to consolidate after a bullish breakout that occurred on Monday, 02 January 2016 reinforced by a positive German manufacturing PMI reading of 55.6 for December.

Please click on this link for a recap on our latest weekly technical outlook/strategy published yesterday.

Key elements

• The Index has staged a bullish breakout from the upper limit of a minor sideways range configuration in place since 21 December 2016 high now turns pull-back support at 11480 (see hourly chart).
• Above 11480 rests an intermediate support of 11525 defined by the a minor ascending trendline from 30 December 2016 minor swing low and the 50% Fibonacci retracement from 02 December 2016 low of 11407 to yesterday’s high of 11646 (see hourly chart).
• The short-term hourly Stochastic oscillator is coming close to an extreme overbought level which highlights the risk of a minor pull-back after the bullish breakout that has occurred on Monday, 02 January 2017.
• Based on the Elliot Wave Principal and fractal analysis, the potential price movement remains bullish for the Index as it is now likely to be undergoing the bullish impulsive minor degree wave 3 with potential upside targets set at 11700 and 11800 (see daily & hourly charts).

Key levels (1 to 3 days)

Intermediate support: 11525

Pivot (key support): 11480

Resistances: 11700 & 11800

Next support: 11360

Conclusion

Short-term technical elements remain positive but the Index may see a pull-back first towards the 11525 intermediate support before another potential upleg materialises to target the next resistances at 11700 before 11800.

However, failure to hold above the 11480 short-term pivotal support is likely to invalidate the bullish breakout for a deeper slide towards the next support at 11360.

Charts are from City Index Advantage TraderPro

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