dax daily outlook thurs 28 jan 2016 back at 9680 short term support 1795252016

(Click to enlarge charts)

What happened yesterday

The Germany 30 Index (proxy for the DAX futures) has rebounded as expected and met the first short-term upside target at 9880/9935 zone before it sold off in the late U.S. session.

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

Key elements

• The Index has seen a sell-off of 2.1% from yesterday U.S. session high of 9927 to a low of 9716 after the Fed’s latest monetary policy decision and statement. (Buy the rumours and sell the news mentality). Despite this highly volatile price movement, the decline has managed to stall at the lower boundary (support) of the short-term ascending channel in place since 21 January 2016 low.
• In today’s early Asian session, the Index has managed to form a bullish hourly “Hammer” candlestick pattern on the ascending channel’s support. This observation in price action indicates a change in sentiment from negative to positive where the Index is now likely to resume its  prior potential upside movement after the “disruption” seen in the yesterday’s late U.S. session
• The daily (medium-term) RSI oscillator has continued to inch upwards and still shows room for further upside before reaching its trendline resistance. In conjunction with price action, it is the similar resistance of 10165 which is the lower boundary of the bearish descending channel in place since 30 November 2015 high.
• The significant resistance zone remains at 10165/280 which is our expected medium-term upside target (recap here as per highlighted in our latest weekly outlook/strategy).  This resistance zone now also confluences with the upper boundary of the short-term ascending channel and the 1.00 Fibonacci projection of the up move from 21 January 2016 low to 25 January 2016 high @7am projected from 9560 low.

Key levels (1 to 3 days)

Pivot (key support): 9680

Resistance:  9880/9935 & 10165/280

Next support: 9560 & 9300

Conclusion

Despite the late sell-off seen in the U.S. session after the Fed’s latest monetary policy and statement, we are maintaining our short-term bullish technical view above the similar short-term pivotal support of 9680 (slightly below the lower boundary of the ascending channel and the low of hourly “Hammer” candlestick) for another round of potential push up to retest 9880/9935 before targeting the 10165/280 significant resistance zone.

On the other hand, failure to hold above the 9680 pivotal support is likely to negate the bullish tone for a further slide to retest 26 January 2016 minor swing low at 9560. Only a break below 9560 may trigger a further decline towards the medium-term pivotal support a 9300.

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