dax daily outlook tues 29 mar 2016 risk of a bearish breakdown 1803592016

(Click to enlarge charts)

What happened earlier

The Germany 30 Index (proxy for the DAX futures) has continued to trade sideways after hitting close to our first downside target at 9750 in the aftermath of last week terrorist attacks in Brussels. Please click here to recap our latest weekly (medium-term) outlook/strategy published yesterday.

Today, there will are no major economic data releases for Germany.

Key elements

• The Index is now testing the lower limit of the bearish “Ascending Wedge” configuration in place in place since the start of the countertrend rally from the 11 February 2016 low of 8696.  Price action remains toppish and a break below the lower limit of the “Ascending Wedge” is likely to reinforce our medium-term bearish view on  the Index (the end of the countertrend rally cycle from 11 February 2016 low).
• The significant short-term supports now rests at 9750 (last week swing low area) and 9675 (close to the lower boundary of a short-term descending channel from 23 March 2016 high + 1.00 Fibonacci projection).
• The short-term resistance to watch will be at 9970 (the congestion zone of 23 March 2016 low + 28 March 2016 high @3pm).
• The hourly (short-term) Stochastic oscillator is still oriented to the downside and still has ample room before reaching its extreme oversold level.

Key levels (1 to 3 days)

Pivot (key resistance): 9970

Supports: 9750 & 9675

Next resistance: 10130 (weekly pivot)

Conclusion

Technical elements remain bearish. As long as the daily short-term pivotal resistance at 9970 is not surpassed, the Index faces the risk of bearish breakdown below the “Ascending Wedge” configuration to retest the 9750 level before targeting the next support at 9675 in the first step.

On the flipside, a clearance above the 9970 short-term pivotal resistance may negate the bearish tone to see a test on the 10130 weekly (medium-term) pivotal resistance.

Disclaimer

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