(Click to enlarge charts)
What happened yesterday
The Germany 30 Index (proxy for the DAX) has pull-backed beyond our expectation and broke below the 9950 short-term pivotal support in the U.S. session.
Please click on this link for a recap on our previous short-term daily outlook/strategy.
- Another choppy session for the Index has the broke below the pull-back support of the bullish “Inverse Head & Shoulders” pattern and invalidated the direct rise scenario towards the 10330 resistance.
- The Index is still above the 9750/570 (excess) key long-term support (see weekly chart).
- On the shorter-term, there pull-back resistance of a the former trendline support that has linked the higher lows of 11 January 2016 and 12 January 2016 @3pm is capping the Index at 9980.
- The hourly (short-term) Stochastic oscillator is coming close to its extreme overbought level which suggests limited upside potential.
- The next resistance to watch will be at 10160 (yesterday’s minor swing high) follow by 10330/10400 (preferred medium-term target & 61.8% Fibonacci retracement of the down move from 30 December 2015 high to this Monday, 11 January 2016 low.
Key levels (1 to 3 days)
Supports: 9770 & 9570
Resistances: 9980, 10160 & 10330/400
Choppy price action and we turn neutral for now in the short-term. Only a break above 9980 is likely for the bulls to regain the upper hand for a potential push up to retest 10160 before the medium-term resistance at 10330/400
A crack below the 9770 support may see a further direct drop to test the excess of the key long-term support at 9570.
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