dax daily outlook fri 03 june 2016 corrective minor recovery may have reached a peak below 10285320

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has performed better than our expectation post ECB as it did not shape a declined to test 10082 but rallied straight towards our expected short-term upside target (resistance) at 10285/320 (printed a high of 10274 in today’s Asian session) from yesterday’s European session low of 10152.

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

Today’s key economic data releases as follow:

• Germany Markit Services & Composite PMIs (final) for May @0755 GMT
• U.S. Nonfarm Payrolls for May @1230GMT

Key elements

• The current push up in  price action is now right below the 10285/320 resistance zone which is defined by former congestion area of the minor swing high areas of 31 May 2016 @10pm and 01 June 2016 @ 4pm and the 61.8%/76.4% Fibonacci retracement of the recent decline from 31 May 2016 high to yesterday low of 10152.
• Based on the Elliot Wave Principal, the recent decline from 31 May 2016 high has traced out a 5 waves motion to a yesterday low of 10152. Yesterday’s up move from 10152 is likely a corrective 3 waves structure of a minor degree with potential end targets at the 61.8%/76.4% Fibonacci retracement of the last decline. Therefore, we may start to see the start of another set of 5 waves bearish impulsive down move from the 10285/320 resistance zone.
• In conjunction, the hourly (short-term) RSI oscillator has stalled at its descending trendline resistance in place since 26 May 2016. These observations suggest that the upside momentum of the current push up from 10152 low has started to wane. Risk of a short-term downside reversal at this juncture.
• In the medium-term, the Germany 30 Index is still evolving with an ascending range structure in place since 11 February 2016 low with first support at 10082.
• The significant short-term resistance now stands at 10370 which is defined by the swing high of 31 May 2016.

Key levels (1 to 3 days)

Intermediate resistance: 10285/320

Pivot (key resistance): 10370

Support: 10082

Next resistance: 10530/650

Conclusion

Current price structure and short-term technical elements have suggested that the corrective recovery/up move from yesterday low of 10152 is coming close to a minor cyclical peak at the 10285/320 intermediate resistance. As long as the 10370 short-term pivotal resistance is not surpassed, the Index is likely to shape another potential down leg to target the 10082 support within the on-going medium-term ascending range configuration.

On the flipside, a break above the 10370 short-term pivotal resistance is likely to invalidate the bearish expectation for a further squeeze up towards the medium-term ascending range top at  10530/650.

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