dax daily outlook fri 04 mar 2016 a potential pull backconsolidation looms below 993010060 resistanc

(Click to enlarge charts)

What happened yesterday/earlier

The Germany 30 Index (proxy for the DAX futures) has traded sideways above the predefined short-term pivotal support of 9680.

Please click on this link for recap on our previous outlook/strategy.

Key elements

• The Index is now approaching the upper boundary (resistance) of the bullish ascending channel in place since the start of the countertrend rally at 11 February 2016 low now at the 9930/10060 zone.
• The upper boundary (resistance) of the ascending channel at 9930/10060 is a significant zone at least in the short-term as it confluences with multiple technical elements. Firstly, it is the rejection zone on 26/28 January 2016 that stalled the Index before the steep decline of  12.4% that occurred within two weeks to hit a low 8696 on 11 February 2016 as well as now the pull-back resistance of the former long-term trendline support from 11 September 2011 low. Thirdly, multiple Fibonacci projection clusters from different swing lows.
• Based on the Elliot Wave Principal, the Index is now undergoing a bullish wave sequence of a minor degree (multi-days) which consists of a standard set of 5 waves labelled as (1,2,3,5) that started from 24 February 2016 low @11pm. Current price action is now attempting to complete the wave 3 upleg with a potential target set at 9930/10060 (1.382/1.618 Fibonacci projection levels) before a potential wave 4 downleg (pull-back/consolidation) unfolds.

Key levels (1 to 3 days)

Intermediate resistance: 9930

Pivot (key resistance): 10060

Supports: 9680 & 9540

Next resistance: 10280

Conclusion

The Index is now fast approaching the short-term significant resistance zone of 9930/10060 (medium-term upside target for this week) where it may see a potential pull-back/consolidation towards the 9680 support with the maximum limit set at the significant short-term support of 9540 (the former minor swing high areas of 23 February and 26 February 2016).

On the other hand, a break above the 10060 short-term pivotal resistance is likely to open up scope for a further rally to target the next resistance at 10280.

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