dax daily outlook thurs 12 may 2016 another potential downleg below 998610024 resistance 1810982016

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has dipped lower as expected and almost hit the first short-term downside target (support) at 9900 (printed a low of 9916).

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

Key elements

• The Index remains capped below a short-term descending trendline in place since 21 April 2016 high now acting as a resistance at 10024.
• The hourly (short-term) Stochastic oscillator has inched back up to an extreme overbought level which indicates limited upside potential at this juncture where price action may resume its decline.
• Based on the Elliot Wave Principal and fractal analysis, the corrective wave 4 push up from last Friday, 06 May 2016 low of 9733 is likely to have ended at the 10 May 2016 minor swing high of 10111. Current price action is now in the midst of undergoing a potential bearish downleg wave 5 (a new low) to complete the bearish impulsive wave structure/cycle, labelled as 1/ of an intermediate degree in place since 21 April 2016 high of 10527.
• The significant short-term support remains at 9780/30 which is last Friday, 06 May 2016 swing low area.

Key levels (1 to 3 days)

Intermediate resistance: 9986

Pivot (key resistance): 10024

Support: 9780/30

Next resistance: 10106/165

Conclusion

As long as the tightened daily short-term pivotal resistance of 10024 is not surpassed, we remain bearish for a further potential decline to target the 9780/30 support in the first step.

On the other hand, a break above the 10024 short-term pivotal resistance is likely to negate the bearish tone to see a push up to retest the 10106/165 resistance (minor swing high area of 10 May 2016 & the reintegrated long-term pull-back resistance from 11 September 2011 low, in dotted light blue as per highlighted in the daily chart).

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