dax daily outlook thurs 19 may 2016 potential residual last push up below 1002640 before downleg mat

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has shaped the expected rebound close from the minor range bottom/support of 9780/30 and hit the predefined short-term intermediate resistance at 9950 (printed a high of 9963) before the release of the latest U.S. Federal Reserve monetary policy meeting minutes for the last 26-27 April 2016 meeting.

Thereafter, the Index has reacted off as expected from the 9950 intermediate resistance reinforced by a more upbeat/hawkish tone from Fed officials during the discussion on monetary policy in the April 2016 meeting. The minutes indicated that risks to the economic outlook posed by global economic and financial markets development had receded and majority of Fed officials are prepared to hike interest rates in June.

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

Key elements

• Yesterday’s rejection of the price action from the minor range bottom/support of 9760/30 has stalled right at the descending trendline resistance of 9950 from 21 April 2016.
• Latest price action has indicated that the minor triangle range consolidation in place since 06 May 2016 low is coming to an end with a potential last push up towards 9980 intermediate resistance (Fibonacci cluster).
• The key short-term pivotal resistance remains at 10026/40 which is also now the upper boundary of the minor triangle range consolidation (highlighted in purple).
• The hourly (short-term) Stochastic oscillator is now coming close to an extreme oversold level which supports the potential minor “last push up” view.
• The next short-term support after 9760/30 rests at 9620 which is defined by the 50% Fibonacci retracement of the rally from 11 February 2016 low to 21 April 2016 high.

Key levels (1 to 3 days)

Intermediate resistance: 9980

Pivot (key resistance): 10026/40

Support: 9780/30 & 9620

Next resistance: 10165 (weekly pivot).

Conclusion

Right now, the Index may see a residual “last push up” to test the 9980 intermediate resistance with a maximum limit set at the 10026/40 daily short-term pivotal resistance to end the minor triangle range consolidation. Thereafter, the Index is likely to see the start of another potential downside movement to target the next support at 9620 in the first step.

On the other hand, a clearance above the 10026/40 pivotal resistance may negate the bearish tone to see a further squeeze up to test the 10165 weekly pivotal resistance

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