dax daily outlook thurs 18 feb 2016 minor pull back first below 9430485 watch the 93409270 support n

(Click to enlarge charts)

What happened yesterday

The Germany 30 Index (proxy for the DAX futures) has rallied as expected right above the pre-defined support zone of 9114/9040 throughout the European/U.S. sessions.

In this morning’s Asian session, it has continued to inch higher and hit our expected upside target at 93430/485. Please click on this link for a recap on our previous daily outlook/strategy.

Key elements

• Even though the short-term upside target has been met at 930/485, technical elements are still not showing any clear signs of exhaustion/bearish reversal at this juncture. The daily (medium-term) RSI oscillator still has some room left before reaching its trendline resistance which suggests potential residual upside momentum for the Index to push higher.
• Based on the Elliot Wave Principal, the on-going bullish wave v appears to be an extension as price action has only traced out a three waves movement from the end of wave iv (low of 9078). The minimum extended 5^th wave target for wave v target stands at 9650 which is derived from the 1.00 Fibonacci projection of the rally from the length of wave i to iii projected from wave iv low of 9078 seen from 17 February 2016 @12am.
• The expected minimum extended 5^th wave target of 9650 also confluences with the upper boundary of the short-term bullish ascending channel in place since 11 February 2016 low and the minor swing high of 9618 printed on 04 February 2016.
• The lower boundary (support) of the short-term ascending channel now rests at 9270 which is also the 23.6% of the current rally from 11 February 2016 low to the current high of 9472.
• The hourly (short-term) Stochastic oscillator is oriented to the downside and still has ample room for further downside potential before reaching its extreme oversold level. This observation suggests the risk of minor pull-back at this juncture.

Key levels (1 to 3 days)

Intermediate support: 9340

Pivot (key support): 9270

Resistances: 9430/485 & 9618/650

Next support: 9100

Conclusion

Technical elements are still positive but a minor pull-back below 9430/485 cannot be ruled out at this juncture. Therefore, we are now expecting a potential drop first towards 9340 with a maximum limit set at the 9270 short-term pivotal support before another upleg materialises to target the next resistance at 9618/650.

On the flipside, a break below the 9270 short-term pivotal resistance may put the bulls on hold to see a deeper retracement towards the next support at 9100.

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