dax daily outlook fri 17 june 2016 coming close to 9770 resistance where a potential downside revers

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has staged the expected “snap-back rally” right at the predefined 9440/30 support and hit the first short-term target/resistance at 9640 (printed a high of 9668) in yesterday’s U.S. session as per highlighted in previous short-term technical outlook/strategy published yesterday.

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

Key elements

• Current price action is now coming close to the 9770 intermediate resistance (potential “snap-back” rally end target) which is defined by the short-term pull-back resistance from 1 June 2016 low (depicted in pink) and now the 38.2% Fibonacci retracement of the decline from 07 June 2016 high to yesterday’s low of 9431 (see 1 hour chart).
• The key short-term resistance to watch now will be at 9850/880 which is defined by a confluence of elements (former congested swing low areas of 06 May/13 May/24 May 2016), pull-back resistance of the former triangle range’s support (depicted in purple) and now the 50% Fibonacci retracement of the decline from 07 June 2016 high to yesterday’s low of 9431 (see 4 & 1 hour charts).
• Based on the Elliot Wave Principal and fractal analysis, the current push up in price action from yesterday’s low of 9431 is likely a minor corrective wave 4 “snap-back rally” with a potential projected target at 9770.  Current price action is coming close to this level where the medium-term down move is likely to resume for an impending bearish wave 5 of 3/ downleg.
• The 4 hour Stochastic oscillator has reached an extreme overbought level which suggests limited upside potential in price action at this juncture as short-term upside momentum has been overstretched.

Key Levels (1 to 3 days)

Intermediate resistance: 9770

Pivot (key resistance): 9850/880

Supports: 9560 & 9440/390

Next resistance: 10080

Conclusion

“Snap-back rally” is coming close to target/resistance at 9770. As long as the 9850/880 daily pivotal resistance is not surpassed, the Index is likely to see the start of another potential downleg to retest the supports of 9560 and 9440/390 in the first step.

On the other hand, a clearance above the 9850/880 short-term pivotal resistance is likely to invalidate the preferred bearish bias for an extension of the “snap-back rally” towards the next resistance at 10080 (the former minor swing low areas of  03 June/09 June 2016).

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