(Click to enlarge charts)
What happened yesterday
The Germany 30 Index (proxy for the DAX) has inched higher and tested the 10080 pivotal resistance before staging a retreat in the late European session.
Please click on this link for a recap on our previous daily outlook
- Yesterday’s price action has led to a bullish breakout of the former descending channel (in pink) in place since 09 September 2015 now turns pull-back support at 9890 .
- The pull-back support at 9890 also confluences with the 23.6% Fibonacci retracement from 02 October 2015 low @9pm to the recent 07 October 2015 high @10pm (the minimum corrective wave 4 target based on the Elliot Wave Principal and a potential bullish reversal may occur from this juncture)
- The daily (medium-term) RSI oscillator has just broke above its former resistances and the 50% neutrality level. These observations suggest that upside momentum has resurfaced.
- The hourly (short-term) Stochastic oscillator has dipped back on its extreme oversold region which suggests a potential upturn in price action is round the corner.
- Based on inter-market analysis, the Asian major stock indices, Nikkei 225 and Hang Seng Index have staged a bullish breakout above their former weekly pivotal resistances (Nikkei 225 = 18130 & Hang Seng = 22260 respectively). Even though, the German 30 remains below the 10080 weekly resistance, the conviction is now low for the medium-term “last push down” scenario to retest the “Black Monday” 24 August 2015 low of 9320.
Key levels (1 to 3 days)
Pivot (key support): 9890
Next support: 9780
As long as the 9890 daily (short-term) pivotal support holds, the Index is likely to see a push up to retest the 10080 weekly pivotal resistance.
On the contrary, a crack below the 9890 pivotal support may negate the expected bullish upturn for a deeper slide to target the next support at 9780 (former minor swing high of 01 October 2015 @2pm).
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