dax daily outlook wed 27 jan 2016 9680 support to watch today to maintain bullish tone 1795042016

(Click to enlarge charts)

What happened yesterday

The Germany 30 Index (proxy for the DAX futures) has retraced as expected and made a low of 9562 (just above the predetermined 9500 short-term pivotal) in the early European session before it reversed and rallied throughout into the U.S. session. Our expected short-term upside target of 9880/9935 is almost met (printed a high of 9868).

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

Key elements

• In the shorter-term, the Index has started to evolve into a bullish ascending channel in place since 21 January 2016 low.
• The lower boundary (support) of the short-term ascending channel now rests at 9680 which also confluences closely with the 61.8% Fibonacci retracement of yesterday’s steep rally from 9560 low to 9868 high).
• The next resistance stands at the significant zone of 10165/280 which is our expected medium-term upside target (recap here as per highlighted in our latest weekly outlook/strategy). Now, it also coincides closely with the upper boundary of the short-term ascending channel and the 1.00 Fibonacci projection of the up move from 21 January 2016 low to 25 January 2016 high @7am projected from 9560 low).
• The hourly (short-term) Stochastic oscillator still has some room left for further downside before reaching its extreme oversold level. This observation suggests the risk of a further dip in price during the early European session later.

Key levels (1 to 3 days)

Pivot (key support): 9680

Resistance:  9880/9935 & 10165/280

Next support: 9560 & 9300

Conclusion

After a steep rally seen yesterday, the Index is now undergoing a potential pull-back in price action. We expect a further potential dip but holding above today’s short-term pivotal support of 9680 before another round of upside movement to target the significant resistance zone of 10165/280.

However, failure to hold above the 9680 pivotal support is likely to negate the bullish tone for a slide to retest yesterday’s minor swing low at 9560. Only a break below 9560 may trigger a further decline to target the medium-term pivotal support a 9300.

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