dax daily outlook fri 01 apr 2016 looking vulnerable for a potential bearish breakdown 1804192016

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has performed worse than expected. It did not shape a push up towards the 10130 weekly/medium-term pivotal resistance and broke below the first short-term support at 9955.

Please click on this link for a recap on our previous short-term daily outlook/strategy.

Today key economic data releases for Germany and U.S. will as follow:

1)      Germany Markit Manufacturing PMI for Mar @0755 GMT

2)      U.S. Nonfarm Payrolls & Unemployment Rate for Mar @1230 GMT

3)      U.S. ISM Manufacturing PMI for Mar @1400 GMT

Key elements

• The Index is now testing/breaking the lower limit of the bearish “Ascending Wedge” configuration with indicates an exhaustion of the recent up move from 29 March 2016 that was triggered from Fed chairwomen Yellen’s dovish speech on future policy interest rate hikes.
• The next significant short-term supports rests at 9850/750 which is defined by the short-term ascending trendline and linking the higher lows since the 17 March 2016 low @ 6pm and the swing low area of 22 March 2016 follow by 9580 (swing high areas of 02/04 March 2016 + 38.2% Fibonacci retracement of the countertrend rally from 11 February 2016 low to 30 March 2016 high of 10099.
• The short-term pivotal resistance will now be at 9985 which is just above the minor swing  high area of 28/29 March 2016 and close to the 50% Fibonacci retracement of the recent decline from 30 March 2016 high of 10099 to the current low.

Key levels (1 to 3 days)

Pivot (key resistance): 9985

Supports: 9850/750 & 9580

Next resistance: 10130 (weekly/medium-term)

Conclusion

The Index is now looking vulnerable for a bearish breakdown below the lower limit of the “Ascending Wedge” configuration. The latest piece of price action reinforces our medium-term bearish view on the Index that the on-going countertrend rally from 11 February 2016 low has ran its course where at least a potential retracement (decline) is round the corner.

The daily short-term pivotal resistance will be at 9985 for a potential push down towards the 9850/750 zone. A break below 9750 is likely to open up scope for a further plunge to target the next support at 9580 in the short-term.

However, a break above the 9985 short-term pivotal resistance is likely to negate the bearish expectation to see another round of choppy price action to retest the range top at 10130 (weekly/medium-term pivotal resistance).

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