dax daily outlook fri 15 apr 2016 risk of a pull back looms below key 10130150 1806392016

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has staged the expected push up towards the 10130/150 range top (the short-term) pivotal resistance and remained below it.

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

Key elements

• The 10130/150 range top is considered as significant resistance as it confluences with several factors. Firstly, it is a region that has rejected previous advances in the past three occasions (in shaded pink ovals on the daily chart). Secondly, it is the pull-back resistance of the former “Ascending Wedge” support (in dotted purple on the daily chart) and the swing high areas of 21/23 March 2016. Lastly, it also coincides closely with a 2.618 Fibonacci projection of the current rally from 08 April 2016 low at 9442 to 08 April 2016 high at 9677 projected from 11 April 2016 low @3pm.
• Momentum indicators have started to show signs of upside deterioration. The daily (medium-term) RSI oscillator is now right below its resistance that has led to a pause in prior advances seen in the price action of the Index. The 4 hour (short-term) Stochastic oscillator has just flashed a bearish divergence signal at the overbought region.
• The near-term support remains at 9950 which is the former resistance and now close the pull-back support of the ascending channel (in blue) bullish breakout that has linked up the higher lows from 08 April 2016 low as well as a steeper ascending trendline from 11 April 2016 low @3pm (in green)
•  Below 9950 will be the 9780/755 support zone which is defined by former congested area that has been broken up to the upside on 13 April 2016 and close to the ascending channel’s support from 08 April 2016 low).

Key levels (1 to 3 days)

Pivot (key resistance): 10130/150

Supports: 9950 & 9780/755

Next resistance: 10400

Conclusion

The Index has approached close to a potential risk zone of 10130/150 for the bulls. As long as the 10130/150 pivotal resistance is not surpassed, the Index is likely to see a slide towards the first short-term support at 9950 and a break below 9950 may open up scope for a deeper pull-back towards the 9780/755 support zone.

On the other hand, a clearance above the 10130/150 pivotal resistance may invalidate the pull-back scenario for a potential extension of the current up move towards the next resistance at 10400 in the first step.

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this email, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs. All queries regarding the contents of this material are to be directed to City Index, a trading name of GAIN Capital Singapore Pte Ltd.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.