dax daily outlook fri 25 sep rebounded just above 9320 key support 9570 potential upside trigger lev

(Click to enlarge charts)

What happened earlier

The Germany 30 Index (proxy for the DAX) has staged the expected “relief rebound” on Wed, 23 September 2015 and almost hit the lower limit of our defined target at 9780 (printed a high of 9711 on 23 September 2015 @ the 4pm hourly candle).

Thereafter, it has continued its decline towards the lower limit of the “critical support” zone at 9320 (printed a low of 9362 on 24 September 2015 @ the 10pm hourly candle) before staging a recovery in the late U.S. session.

Please click on this link for a recap on our previous daily outlook.

Key elements

• The recent decline has managed to hold above the lower limit of the significant critical support zone at 9320. In addition, it has formed another similar daily long-legged candlestick yesterday as seen on the “Black Monday”, 24 August 2015 low (click here for our weekly outlook highlights). This is a positive observation because from a behaviour/sentiment perspective it indicates that the bears are hesitant to push the Index lower.
• On the short-term time frame, the hourly RSI oscillator has also flashed a bullish divergence signal which suggests that the current downside momentum has lost its strength.
• The Index is still capped by a short-term descending trendline (in red) joining the highs from 18 September 2015 @ the 2am hourly candlestick now resistance at 9570.
• The hourly (short-term) Stochastic oscillator is inching downwards and still has some room left for further downside before reaching its oversold region. This observation indicates a possible pull-back in price action of the Index below the 9570 trendline resistance as aforementioned.

Key levels (1 to 3 days)

Intermediate support at 9440

Pivot (key support): 9320

Resistance: 9570 & 10000/10080

Next support: 9127

Conclusion

Technical elements have suggested that the downside momentum of the decline from 09 September 2015 high has abated. Any potential pull-back is likely to be held by the 9440 intermediate support and a break above 9570 is needed to trigger a potential further recovery to target the 10000/10080 resistance zone.

On the other contrary, failure to hold above the 9320 pivotal support (“Black Monday”, 24 August 2015 low) is likely to invalidate the expected recovery to see a further waterfall slide towards t he next support at 9127 in the first step.

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