dax daily outlook fri 29 jan 2016 spoked by european banks earnings watch 9770 to revive potential b

(Click to enlarge charts)

What happened yesterday

The Germany 30 Index (proxy for the DAX futures) has broken below the 9680 short-term pivotal support due to weaker than expected earnings results from European banks particularly Deutsche Bank.

Our short-term bullish technical view (1 to 3 days) has been put on hold/invalidated after yesterday’s price action but near in mind that the medium-term (1 to 3 weeks) view of an expected mean reversion / “snap-back” rally remains intact as the Index remains above the 9300 medium-term pivotal support (click here for more details on our current weekly outlook/strategy).

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

Key elements

• Despite yesterday decline of 2.9% (one of the worst performer among major indices), the daily (medium-term) RSI oscillator is still holding above its trendline support which suggests that the medium-term upside momentum remains intact (see daily chart).
• On the shorter-term, the Index has broken below the ascending channel’s lower boundary that has linked the higher lows since 21 January 2016 now turns pull-back resistance at 9770.
• The next significant short-term support rests at 9560 which is defined by the minor swing low of 26 January 2016 @4pm and a Fibonacci cluster which yesterday’s decline has managed to stall and did a rebound above it.

Key levels (1 to 3 days)

Pivot (key support): 9560

Resistance:  9770, 9880/9935 & 10165/280

Next support: 9300 (medium-term pivot)

Conclusion

9560 will be the short-term pivotal support but only a break above 9770 is likely to revive the potential short-term bullish force to retest 9880/9935 before targeting the 10165/280 significant resistance zone (our medium-term expected upside target).

However, a break below 9560 is likely to negate the bullish tone for a further slide towards the 9300 medium-term pivotal support.

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.