dax daily outlook tues 10 may 2016 potential bearish reaction below 10165 medium term pivotal resist

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has continued to push higher from last Friday, 06 May 2016 low of 9733 which is in line with the rest of major stock indices except for China based benchmark indices such as the A50 which continued to plummet by 5% from its 03 May 2016 high.

Key elements

• Despite yesterday’s push up in price action, the medium-term bearish trend for the Index in place since the decline from 21 April 2016 high remains intact. Current price action is now coming close to a descending trendline from 21 April 2016 high at 10070.
• The aforementioned descending trendline resistance of 10070 is slightly below the current medium-term pivotal resistance of 10165 which is defined by a Fibonacci retracement cluster and the minor swing high area of 02 May 2016. Please click link to recap our latest weekly outlook/strategy published yesterday.
• The hourly (short-term) Stochastic oscillator has reached an extreme overbought level which suggests limited upside potential at this juncture.
• The near-term support rests at 9900 which is the former minor swing high area of 05 May 2016 follow by 9730 (last Friday’s swing low area).

Key levels (1 to 3 days)

Intermediate resistance: 10070

Pivot (key resistance): 10165

Supports: 9900 & 9730

Next resistance: 10365

Conclusion

As long as the 10165 weekly medium-term pivotal resistance is not surpassed, the Index may see a bearish reaction to retest the 9900 support before targeting last Friday’s swing low area of 9730.

However, a clearance above (daily close) the 10165 medium-term pivotal resistance is likely to invalidate the medium-term bearish trend to open up scope for a further rally towards the next resistance at 10365 in the first step.

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this email, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs. All queries regarding the contents of this material are to be directed to City Index, a trading name of GAIN Capital Singapore Pte Ltd.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.