dax daily outlook tues 19 apr 2016 potential short term push up towards 1031010400 1807012016

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has rallied and broke above the 10130 medium-term pivotal resistance. Our preferred medium-term bearish view for a drop towards the range support of 9430 has been invalidated.

Key elements

• Since the 08 April 2016 low @4am, the Index has evolved within a short-term bullish ascending channel with its lower boundary support at 10000 and upper boundary (resistance) at 10310.
• The upper boundary of the ascending channel at 10310 also coincides closely with the 0.618 Fibonacci projection of the up move from 08 April 2016 low to 14 April 2016 high projected from yesterday low of 9905.
• The next significant resistances after the 23 March 2016 swing high stands at 10400 (close to the 61.8% Fibonacci retracement of the steep down move from 30 November 2015 high to 11 February 2016 low) follow by 10630 (the upper boundary of the descending channel in place since 12 April 2015 high) (see daily chart).
• The hourly (short-term) Stochastic oscillator has just exited from its overbought region which highlights the risk of a short-term pull-back.
• The intermediate support to watch stands at 10081 which is the former swing highs area of 30 March and 14 April 2016.

Key levels (1 to 3 days)

Intermediate support: 10081

Pivot (key support): 10000

Resistances: 10310 & 10400

Next support: 9755

Conclusion

Technical elements have turned positive for the short-term but it the longer-term in order for the bulls to get an upper hand, the Index needs to surpass the resistance zone of 10400/630 (refer to the daily chart and the above mentioned elements on why this zone is critical).

Right now, we are seeing a relentless short-term bullish trend driven by momentum rather than fundamentals. Any pull-back in price action is likely to be supported by 10081 with a maximum limit set at the short-term daily pivotal support of 10000 before another upleg occurs to target the 10310 resistance and even 10400.

On the flipside, failure to hold above the 10000 short-term pivotal support may see another round of choppy price action as the Index reintegrated back into the range for a push down to retest the 9755 support in the first step.

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