dax daily outlook wed 16 mar 2016 maintain bearish bias below 10100280 risk zone 1802102016

(Click to enlarge charts)

What happened yesterday/earlier

The Germany 30 Index (proxy for the DAX futures) has traded sideways below the 10100/280 pivotal resistance (risk zone) as expected.

Please click on this link for a recap on our previous daily short-term technical outlook/strategy.

Key elements

• Shor-term price action has turned toppish below the 10100/280 “risk zone” which is defined by a confluence of elements (for more details, click over here as per highlighted in our latest weekly outlook/strategy). It has formed an impending bearish “Double Top” configuration with its neckline support at 9860 (see hourly chart).
• The next short-term support rests at 9700 which is defined now by the lower boundary of the ascending channel in place since the start of the countertrend rally from 11 February 2016 low and close to the 23.6% Fibonacci retracement of the similar low of 11 February 2016 to this Monday, 14 March 2016 high of 10041.

Key levels (1 to 3 days)

Pivot (key resistance): 10100/280

Supports: 9860 & 9700

Next resistance: 10390 (weekly pivot)

Conclusion

We maintain our bearish bias to see the start of a potential steep decline as we are at the tail end of the countertrend rally cycle that started from the 11 February 2016 low of 8696. As long as the 10100/280 “risk zone” is not surpassed, the Index is likely to see a slide towards 9860 (neckline of the mini “Double Top”) and a break below may add impetus for a further decline to target the next support at 9700 in the first step.

On the flipside, a shot past the 10100/280 short-term pivotal resistance may put the bears on hold to see a “residual” squeeze up towards the “excess” at 10390 (weekly pivotal resistance).

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