dax daily outlook thurs 10 dec downside pressure prevails to test 10380 critical support 1790192015

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What happened yesterday

The Germany 30 Index (proxy for the DAX) has broken below the lower limit of the short-term neutrality zone at 10640 and validated a further decline.

In the U.S. session, it has dropped lower and hit the downside target at 10520 (printed a low of 10448). Please click on this link for a recap on our previous daily outlook.

Key elements

• Yesterday’s decline in price action (the second day in a row since 08 December 2015) has reached the upper limit of the pull-back support area of the prior ‘Double Bottom” bullish breakout (occurred on 22 October 2015) at 10520.
• The lower limit of the pull-back support area of the prior ‘Double Bottom” bullish breakout rests at 10380 which also confluences with the 50% Fibonacci retracement of the up move from 29 September 2015 low to the 30 November 2015 high.
• On the shorter-term, the Index is being capped by a trendline resistance linking the lower highs from 07 December 2015 now at 10675 which also coincides with the former support area of 04 December to 08 December 2015 now turns pull-back resistance.

Key levels (1 to 3 days)

Pivot (key resistance): 10610/10675

Support: 10380

Next resistance: 10980

Conclusion

As long as the 10610/10675 daily (short-term) pivotal resistance is not surpassed, the Index still faces the risk of a potential final down leg to test the critical support at 10380.

However, a clearance above the 10610/10675 pivotal resistance may put the bears on hold for a squeeze up towards the minor 07 December 2015 swing area at 10980.

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