dax daily outlook thurs 11 feb 2016 further potential downside pressure below 90159130 1796792016

(Click to enlarge charts)

What happened earlier

The Germany 30 Index (proxy for the DAX futures) has continued to tumble since the bearish breakdown of the former critical support at 9300.

Current price action is now coming close to the upper limit of our expected medium-term (1 to 3 weeks) downside target at 8580. Please click on this link for a recap on our latest weekly outlook/strategy that was published last Sunday.

Key elements

• The Index has continued to evolve within a short-term bearish descending channel in place since 01 February 2016 high with its lower boundary (support) now at 8580 which also confluences with the upper limit of the expected medium-term target highlighted earlier in our weekly outlook.
• Slightly higher at around 8650 , a Fibonacci projection cluster can also be found as per defined by the 1.618 and 0.618 projections taken from 28 January 2016 high @1am and 04 February 2016 high respectively (see daily chart).
• The significant short-term resistance now stands at 9130 which is defined by the upper boundary of the descending channel and yesterday’s minor swing high.
• The hourly (short-term) Stochastic has started to reverse up from its oversold region and still shows room for further upside potential before reaching its extreme overbought region. This observation suggests a relief rebound is on the cards at this juncture.

Key levels (1 to 3 days)

Intermediate resistance: 9015

Pivot (key resistance): 9130

Support: 8650/580

Next resistance: 9300

Conclusion

Technical elements remain bearish. The Index may see a relief rebound towards the intermediate resistance at 9015 with a maximum limit set at the 9130 short-term pivotal resistance before another downleg occurs to target 8650/8580 support.

On the flipside, a clearance above the 9130 pivotal resistance is likely to negate the bearish tone for see a further relief rebound towards the former critical support now turns resistance at 9300.

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