dax daily outlook wed 17 feb 2016 watch 91149040 support for potential bullish revival 1797592016

(Click to enlarge chart)

What happened yesterday

The Germany 30 Index (proxy for the DAX futures) has dropped as expected below the 9300/340 resistance (printed a high of 9274) and met the upper limit of our downside target at 9090 (printed a low of 9078).

Please click here for a recap on our previous daily outlook/strategy.

Key elements

• Yesterday’s drop in price action has managed to stall at the lower boundary of the short-term bullish ascending channel in place since 11 February 2016 low and the 38.2% Fibonacci retracement of the  wave iii rally from 12 Feburary 2016 low of 8746 @3am to yesterday’s high of 9274).
• In conjunction with the abovementioned observation and based on  the Elliot Wave Principal, the Index is likely to have completed the minor pull-back (wave iv) of a minute degree (short-term) since the typical wave iv target has been met at the 38.2% retracement level. Going forward, higher probability is now skewed towards the bulls to see another upleg to complete the wave v of a set of bullish impulsive five waves structure that started from 11 February 2016 low, labelled as a.
• The next resistance after 9275/9300 stands at 9430/485 which is defined by the upper boundary of the short-term ascending channel and the standard 5^th wave projection of 0.618/0.764 from 11 February 2016 low of 8696 to 16 February 2016 high of 9274 projected from 17 February 2016 low of 9078 @12am.
• The hourly (short-term) Stochastic oscillator has turned down and retested its extreme oversold level which suggests limited downside potential at this juncture.

Key levels (1 to 3 days)

Intermediate support: 9114

Pivot (key support): 9040

Resistances: 9275/300 & 9430/485

Next support: 8750

Conclusion

Technical elements suggest that the Index is likely to have completed its minor pull-back from yesterday’s high of 9274. As long as the 9114/9040 support zone bolds, the Index may now see the start of another upleg to retest the previous minor swing high area of 9275/300 in the first step before setting sight on the next resistance at 9430/485 to complete the impending bullish five waves structure of a.

On the other hand, a break below the 9040 short-term pivotal support is likely to invalidate the recovery scenario for a deeper slide to retest the 11 February 2016 swing low area of 8750.

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