dax daily outlook thurs 05 tues coming close to 1075010690 range support for a potential rebound 172

(Click to enlarge charts)

What happened yesterday

The Germany 30 Index (proxy for the DAX) has once again shaped a slide from the 11000 level, the upper boundary of the “Expanding Triangle” consolidation and tested the lower boundary of the neutrality zone at 10855 before trading sideways.

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

Key elements

• The Index is still capped by the upper limit of a potential “Expanding Triangle” consolidation configuration (in pink) at 11000 that has been in place since 24 October 2015 high.
• Current price action is now inching down lower towards the 10750/10690 support which is the lower limit of the “Expanding Triangle” and the pull-back support of the ascending channel bullish breakout (in orange).
• The hourly (short-term) Stochastic oscillator that gauges price momentum still has some room for further downside before reaching its extreme oversold level. This observation indicates the price action of the Index is likely to dip lower slightly.
• The medium-term key resistance remains at 11220 (see daily chart).
• Based on the Elliot Wave Principal, the current price action is undergoing the final down leg of the e* wave of a five wave (a*, b*, c* d* & e*) “Expanding Triangle” consolidation configuration to complete a larger degree corrective (bearish ) wave 4 before the bullish wave 5 materialises.

Key levels (1 to 3 days)

Intermediate support: 10750

Pivot (key support): 10690

Resistance: 11000 & 11220

Support: 10480 (weekly pivot)

Conclusion

The current slide seen in the Index from the 11000 range top is coming close to the lower limit of the “Expanding Triangle” consolidation at 10750 and technical elements are advocating for an imminent rebound. As long as the 10690 daily (short-term) pivotal support holds, the Index is likely to shape a potential recovery to retest the range top at 11000 in the first step.

However, failure to hold above the 10690 pivotal support may put the recovery scenario on hold for a deeper slide to target the 101480 weekly pivotal support (pull-back support of the “Double Bottom” bullish breakout).

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