dax daily outlook tues 03 may 2016 potential bearish tone remains intact below 1015010270 resistance

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has inched slightly higher but it remained below the intermediate resistance zone of 10165/270 as per highlighted in our weekly outlook/strategy.

Please refer to this link for a recap our latest weekly technical outlook/strategy published on Sunday.

Key elements

• Yesterday’s price action of the Index has remained below a short-term significant descending trendline from 21 April 2016 high at 10270. Right below 10270, there is a short-term intermediate resistance at 10150 which is defined by the former minor swing low area of 28 April 2016 (see 1 hour chart).
•  The 4 hour (short-term) Stochastic oscillator has started to inch down from its overbought region which suggests that downside momentum of price action has resurfaced.
• The significant short-term support rests at 9900 which is defined by the minor swing low area of 18 April 2016 @2pm that has tested the former minor swing high of 04 April 2016 and also a Fibonacci cluster (61.8% retracement of the recent up move from 08 April 2016 low @2am to last Friday, 21 April 2016 high of 10527 + 1.618 projection of the down move distance from 21 April 2016 high to 26 April 2016 low of 10209) (see 4 hour & 1 hour charts).
• From the Elliot Wave Principal, the Index is likely to be undergoing a bearish downleg wave iii of a minor degree with a potential end target at 9900 (the Fibonacci cluster as per above mentioned) before a potential corrective wave iv rebound occurs thereafter.

Key levels (1 to 3 days)

Intermediate resistance: 10150

Pivot (key resistance): 10270

Support: 9900

Next resistance: 10360 (weekly pivot)

Conclusion

We maintain our short-term bearish bias for the Index. As long as the 10270 daily short-term pivotal resistance is not surpassed, the Index is likely to see another potential downleg to target the 9900 support in the first step before a potential corrective rebound occurs.

However, a break above the 10270 short-term pivotal resistance may invalidate the short-term direct bearish scenario to see a push up to test the weekly medium-term pivotal resistance at 10360. On a daily close above 10360 is likely to damage our preferred medium-term bearish view on the Index.

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