dax daily outlook thurs 16 june 2016 coming close to 9440390 support where a potential short term re

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has pushed higher to print a high of 9667 before the U.S. central bank (Fed)’s latest monetary policy decision where the Fed did not hike its policy interest rate (within expectations) and maintain its median projection of at most two rate hikes before 2016 ends.

Thereafter, it has started to drift lower where we have highlighted in our prior daily short-term technical outlook/strategy that the Index may see a last push down first before a potential “snap-back rally” occurs (click here to recap).

Today key Eurozone economic data releases as follow:

• Eurozone Consumer Price Index for May @0900GMT (-0.1% y/y & 0.2% m/m estimates with Core y/y/ estimate at 0.8%)

 Key elements

• Current price action has continued to drift lower and it is now coming close to the medium-term support at 9430 which is defined by the 08 April 2016 swing low area as well as a Fibonacci cluster at the 9390 level (see 4 hour chart).
• The 4 hour and 1 hour Stochastic oscillators are now coming close to their respective extreme oversold levels which suggests that the short-term downside momentum of price action is getting “overstretched” where an imminent minor rebound may occur at this juncture.
• Based on the Elliot Wave Principal and fractal analysis, the Index is now coming close to see a completion of its minor extended bearish implusive wave 3 down movement in place since 07 June 2016 high of 10316 with a projected target at 9440 (2.618). Thus, a potential “snap-back” rally (minor wave 4) may occur at the 9440/9390 region to retrace the on-going steep decline.
• The significant short-term resistances to watch will be at 9640 (yesterday’s minor rejection area) and 9770 which is defined by a confluence of elements (the former minor swing low areas of 06/13/19/24 May 2016 and short-term pull-back resistance from 1 June 2016 low (depicted in pink) (see 4 & 1 hour charts).

Key levels (1 to 3 days)

Intermediate support: 9440/30

Pivot (key support): 9390

Resistances: 9640 & 9770

Next support: 9120

Conclusion

Coming close to 9440/30 support where a potential short-term rebound looms. As long as the 9390 daily short-term pivotal support holds, the Index is likely to have seen a completion of minor bearish down leg (wave 3) and it is due for a potential “snap-back” rally towards the near-term resistances at 9640 and 9770.

However, a break below the 9390 short-term pivotal support is likely to see the continuation of the waterfall decline towards the next support at 9120 (minor swing low of 24 February 2016).

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