dax daily outlook tues 03 tues at expanding triangle upper limit risk of a pull back 1714182015

(Click to enlarge chart)

Key elements

• Even though the Germany 30 Index (proxy for the DAX) has inched above the previous 10926 high printed on 29 October 2015, certain technical elements are advocating for an excess (no strong conviction for a further push up).
• Since 24 October 2015 high, the Index has appeared to the evolving within an “Expanding Triangle” consolidation configuration (in pink) with its current upper limit (resistance) at 11000 and lower limit (support) at 10750.
• Current price action has push up towards the upper limit of the “Expanding Triangle” at 11000. In addition, the hourly (short-term) RSI oscillator has flashed a bearish divergence signal at its overbought region.
• The aforementioned observations from price action and momentum indicator suggest that the upside momentum of yesterday’s strong push up has started to abate and the Index may see a risk of a pull-back at this juncture.

Key levels (1 to 3 days)

Pivot (key resistance): 11000

Support: 10855 & 10750

Next resistance: 11220

Conclusion

The Index is now coming close to the range top of the “Expanding Triangle” at 11000 and technical elements are advocating for a potential pull-back in price action. As long as the 11000 daily (short-term) pivotal resistance is not surpassed, the Index may see a slide to test the 10855 intermediate support and a break below it is likely to add impetus for a further push down to target the lower limit of the “Expanding Wedge” at 10750.

On the other hand, a clearance above the 11000 pivotal resistance is likely to jeopardise the bears for a further squeeze up towards the current medium-term upside target at 11220 (click here for more details as per highlighted in our latest weekly outlook).

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