dax daily outlook 05 jan 2016 further potential upside above 10250 support 1791642016

(Click to enlarge chart)

Key elements

• After a decline of 3% seen yesterday, the Germany 30 Index (proxy for the DAX) has managed to stage a rebound from the 10250 support level.
• The 10250 support level is defined by a closely by a Fibonacci cluster (76.4% Fibonacci retracement of the recent upmove from 15 December 2015 low to 17 December 2015 high + 1.382 Fibonacci projection of the decline from 17 December 2015 high @7pm to 22 December 2015 low @5pm projected from 30 December 2015 high @9am).
• The hourly (short-term) RSI oscillator has exited from its oversold region and still has room for further potential upside before reaching its extreme overbought level. This observation suggests that upside momentum has resurfaced.
• The intermediate resistance now stands at 10640 which is defined by the former trendline support from 15 December 2015 low now turns pull-back resistance and 61.8% Fibonacci retracement of yesterday’s steep downmove from 30 December 2015 to 05 January 2015 low @12am.

Key levels (1 to 3 days)

Intermediate support: 10320

Pivot (key support): 10250

Resistance: 10640 & 10830

Next support: 10120/10050 (medium-term pivot)

Conclusion

Current technical elements are advocating for a further potential push up towards the intermediate resistance at 10640 with a maximum limit set at 10830 , holding above the 10320/10250 key daily (short-term) support.

On the other hand, a violation below the 10250 short-term pivotal support is likely to negate the expected recovery for a further slide towards the key medium-term pivotal support at 10120/10050 (click here for more details on our latest weekly technical strategy).

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