dax daily outlook for tues 18 aug minor pull back before potential rise 1060532015

(Click to enlarge charts)

What happened yesterday

The German 30 Index (proxy for the DAX) has plummeted and pierced below the 12 August 2015 low at 10890 (weekly pivotal support, click here for more details) due to weaker than expected U.S. New York Empire State Manufacturing data at -14.92 (consensus: 3.86).

Interestingly, it has managed to have a daily close above the 10890 support despite yesterday’s lacklustre performance.

Key elements

• The Index has managed to hold above the 10890 pull-back support of the former ascending channel breakout that occurred in 13 July 2015 (see daily chart).
• The intermediate term Stochastic oscillator has continued to inch upwards from its oversold region and still has room for further upside potential before reaching its extreme overbought region (see daily chart).
• The intermediate resistance stands at 11090/11140 which also confluences with the 38.2% Fibonacci retracement of the recent down move from 06 August 2015 high @4pm to 17 August 2015 low @8pm (see 1 hour chart).
• The hourly Stochastic oscillator still has some room for further downside potential before reaching its oversold region. This observation suggests a potential minor pull-back in the price action of the Index(see 1 hour chart).

Key levels

• Pivot (key support): 10890/10810 (excess from yesterday’s low)
• Resistance: 11090/11140
• Next support: 10600

Conclusion

The Index may see a minor pull-back first just above the 10890/10810 pivotal key support before another round of potential push up to target the 11090/11140 resistance zone.

On the contrary, a direct break below 10810 is likely to trigger a waterfall slide towards the key long-term support of 10600.

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