dax daily outlook thurs 14 jan 2016 choppy price action watch 9980 and 9770 in the short term 179322

(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.

Key elements

• 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

Conclusion

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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