dax daily outlook fri 29 apr 2016 maintain bearish bias and watch the potential downside trigger lev

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has staged a push up after an initial slide to test the 10106 downside trigger level (printed a low of 10119 in the yesterday’s early European session). However, the push up in price action did not manage to break above the predefined 10360 short-term pivotal resistance (printed a high of 10333 in the U.S. session) before it backed down later as expected.

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

Today’s key German/EMU economic data release as follow:

1)      EMU Consumer Price Index for Apr @0900 GMT- Consensus at  0.9% y/y for Core & -0.1% for Non-Core

2)      EMU Unemployment rate for Mar @0900 GMT – Consensus at 10.3%

Key elements

• The short-term key resistance remains at 10360 with is the upper boundary of the short-term bearish descending channel in place since 21 April 2016 high and the minor swing high areas of 26/28 April 2016 (tested thrice as highlighted by the shaded pink boxes on the 1 hour chart).
• The key first support remains at 10106 which is the pull-back support of the former March 2016 range top bullish breakout. The 10106 level is significant as a break below it indicates that the recent March 2016 range top bullish breakout is a failure as price action reintegrates back below the long-term pull-back resistance of a former trendline support from 11 September 2011 low (in dotted light blue) (see daily chart).
• The next short-term support rests at 9900 which is defined by the minor swing low area of 18 April 2016 @2pm that has tested the former minor swing high of 04 April 2016 and also the 61.8% Fibonacci retracement of the recent up move from 08 April 2016 low @2am to last Friday, 21 April 2016 high of 10527 (see hourly chart).

Key levels (1 to 3 days)

Intermediate resistance: 10250

Pivot (key resistance): 10360

Supports: 10106 & 9900

Next resistance: 10630

Conclusion

We maintain our bearish bias below the 10360 daily short-term pivotal resistance but price action needs to have a break below 10106 to add impetus for a deeper potential slide to target the next support at 9900 in the first step.

On the other hand, a break above the 10360 short-term pivotal resistance may invalidate the short-term bearish scenario to see an extension of the current rally towards the next resistance at 10630 (the critical zone of the upper boundary of the long-term descending channel in place since 12 April 2015 high, see attached daily chart).

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