dax daily outlook wed 09 mar 2016 pull back target reached further potential recovery is expected 18

(Click to enlarge charts)

What happened yesterday/earlier

The Germany 30 Index (proxy for the DAX futures) has shaped the expected pull-back towards the short-term pivotal support at 9620/540 (printed a low of 9615) in the European session.

Please click on this link for a recap on our previous short-term daily outlook/strategy posted yesterday, 08 March 2016.

Key elements

• The pull-back from last Friday, 04 Mar 2016 high of 9901 has led the current price action of the Index now to hover just above the lower boundary (support) of the bullish ascending channel in place since the start of this on-going countertrend rally cycle from 11 February 2016 low of 8696.
• The upper boundary (resistance) of the abovementioned ascending channel stands at 10100/280 which also confluences with the previous swing high area of 13 January 2016/swing low area of 14 December 2016 and 1.236 Fibonacci projection of the rally from 11 February 2016 low to 22 February 2016 high projected from 24 February 2016 low of 9123.
• The 4 hour Stochastic oscillator has exited from its oversold region and still has room for further potential upside before reaching its extreme overbought level. This observation suggests a potential built-up of upside momentum in price action.

Key levels (1 to 3 days)

Pivot (key support): 9620/540

Resistances: 9930 & 10100/280

Next supports: 9480 & 9120

Conclusion

Technical elements are still positive on the short-term. We maintain our bullish bias above the 9620/540 pivotal support for a further potential push up to target 9930 intermediate resistance in the first step.

However, a break below the 9620/540 pivotal support is likely to negate the expected recovery to expose the next support at 9480 and only a violation below 9480 may trigger a steeper decline to test the 24 February 2016 swing low area at 9120.

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