dax daily outlook thurs 03 dec potential recovery above 1113011080 weekly pivotal support 1789142015

(Click to enlarge chart)

What happened earlier

The Germany 30 Index (proxy for the DAX) has shaped a deeper pull-back and broke below the 11340 short-term support as market participants await for the key monetary policy decision by the European Central Bank (ECB) later @1245GMT

Key elements

• The current decline from 01 December 2015 high is now resting at the 11130 weekly pivotal support (click here for more details on our latest weekly technical outlook/strategy).
• The 11130 key support also now confluences with the lower boundary of a short-term ascending channel (in orange) in place since 24 November 2015 low and a Fibonacci cluster from a lower degree (61.8% retracement from 24 November 2015 low @9pm to 01 December 2015 high + 1.00 projection from of the down move from 01 December 2015 high @10am to  01 December 2015 low @11pm projected from 02 December 2015 high @6pm.
• The hourly (short-term) RSI oscillator has started to show positive signs as it has a bullish divergence signal at the oversold region and its now attempting to break above its trendline resistance. These observations suggest a revival in upside momentum.
• In the short-term, the first resistance to watch will be at 11340 (prior support turns resistance) follow by 11540 (upper boundary of the short-term ascending channel + 1.00 Fibonacci projection of the up move from 16 November 2015 low @7am to 19 November 2015 high @6pm projected from the 24 November 2015 low @9pm).

Key levels (1 to 3 days)

Pivot (key support): 11130/11080 (excess)

Resistance: 11340 & 11540

Next support: 10960

Conclusion

The Index is now resting at the 11130 weekly pivotal support with an excess tolerated to 11080 and short-term technical elements are showing signs of deceleration in momentum of the current down move from 01 December 2015 high. Therefore, the Index is likely to stage a potential recovery at this juncture to recapture the 11340 level and breaking above it may add impetus for a further rally to target the next resistance at 11540.

However, a break below the key 11130/11080 pivotal support is likely to negate the recovery scenario to see a further slide to test the lower boundary of the medium-term trendline support joining the higher lows since 29 September 2015  now at 10960.

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