dax daily outlook tues 24 may 2016 imminent potential bearish breakout from symmetrical triangle ran

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has staged the expected short-term push up towards the “Symmetrical Triangle” range top at 9980 (printed a high of 9975) in yesterday’s early European session before it retreated and closed lower at 9837 towards the end of the European session.

The earlier “short-lived” push up in price action occurred in line with a stronger than expected May preliminary data for Markit Germany PMI where Manufacturing PMI soared to a 5-month high at 52.4 versus 51.8 seen in April and the Services Activity Index printed a 3-month high of 55.2 versus a reading of 54.5 in April.

Today key Euro zone economic data releases will be as follow:

1)      Germany Q1 GDP @0600 GMT

2)      Germany ZEW Economic Sentiment Survey for May @0900GMT

Key elements

• Based on the Elliot Wave Principal and fractal analysis, yesterday’s push up in price action is likely to have completed the wave e of the “Symmetrical Triangle” range consolidation in place since the 06 May 2016 low of 9733.  The potential end target of the wave e stands at 10026 which is similar in terms of fractal geometry of the prior waves (a, b, c & d) and also confluences closely with the graphical resistance (upper limit-in purple) of the “Symmetrical Triangle” at 9980. Please click here to recap our latest weekly technical outlook/strategy published yesterday.
• The potential tail end of the ‘Symmetrical Triangle” should mark the end of a wave 2/ intermediate degree consolidation and a bearish impulsive wave 3/ of an intermediate degree is likely to start soon at this juncture.
• The next short-term support after the ‘Symmetrical Triangle” range bottom/support of 9780/30 will be at 9620 which is defined defined by the 50% Fibonacci retracement of the rally from 11 February 2016 low to 21 April 2016 high.
• The hourly (short-term) Stochastic oscillator has started to inch down from its overbought region which suggests a revival of downside momentum in terms of price action.

Key levels (1 to 3 days)

Intermediate resistance: 9890

Pivot (key resistance): 9980/10026

Supports 9780/30 & 9620

Next resistance: 10165 (weekly medium-term pivot).

Conclusion

Latest technical developments suggest a potential bearish breakout from the short-term “Symmetrical Triangle” range support at 9780/30 is imminent. As long as the 9980/10026 daily short-term pivotal resistance is not surpassed, the Index is likely to shape a further decline to target the next support at 9620 in the first step.

On the flipside, a clearance above the 9980/10026 short-term  pivotal resistance may put the bears on hold to see a further squeeze up to test the 10165 weekly medium-term pivotal resistance

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