dax daily outlook tues 12 jan 2016 signs of recovery watch the 9960 resistance 1792872016

(Click to enlarge charts)

Key elements

• The Germany 30 Index (proxy for the DAX) has managed to hold above the 9800/9750 long-term key support despite last week’s rout (click here for more details in our latest weekly strategy/outlook).
• On the shorter-term, the Index has started to show signs of bearish exhaustion through as it has traced out an impending bullish “Inverse Head and Shoulders” pattern. This is a positive observation as a bullish chart pattern has formed right at the 9800/750 key long-term support after a horrendous performance seen last week.
• The neckline resistance of the “Inverse Head and Shoulders” pattern stands at 9960 with the exit potential at 10330 which also confluences closely with the 50%/61.8% Fibonacci retracement of the recent steep move from 30 December 2015 high to 11 January 2015 low.

Key levels (1 to 3 days)

Intermediate support: 9800

Pivot (key support): 9750/570 (excess)

Resistance:  9960 & 10330

Next support: 9300

Conclusion

The Index has started to show signs of recovery above the key long-term support at 9750/570 (excess). A break above the neckline resistance of the impending short-term “Inverse Head and Shoulders” is likely to add impetus for a potential further push up to target the next resistance at 10330.

On the flipside, a break below 9570 may invalidate the expected recovery scenario for a further decline to test the 29 September 2015 swing low at 9300.

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