dax maintain bullish bias as 10390 has been surpassed 1830532016

Daily Outlook, Fri 16 September 2016

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has indeed moved within our expectation as we have mentioned earlier that the recent down move in place since last Thursday, 08 September 2016 high of 10781 is considered as an intermediate term corrective decline and a “mini” bear trap rightbelow the 10380 predefined medium-term pivotal support (printed a low of 10297 on Thursday, 15 September 2016, Asian session.

Yesterday’s price action has reinforced our bear trap scenario as the Index has pierced above the 10390 upside trigger level.

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

Key elements

• The Index has started to formed a positive daily candle right at the lower boundary of the medium-term bullish ascending channel in place since 24 June 2016 (Brexit).
• Yesterday’s price action has also staged a bullish breakout above the former intermediate resistance at 10390 now turns pull-back support (depicted in dotted green).
• Short-term key pivotal support now rests at 10350 which is defined by the minor swing low area formed yesterday and also the lower boundary of a minor congestion zone in place since 12 September 2016 low.
• The intermediate resistance remains at the 10600/670 zone which is defined by the former minor swing low area of 08/09 September 2016 and the 61.8%/76.4% of the recent decline seen from 08 September 2016 high (the recent ECB meeting) to 15 September 2016 low of 10297.

Key levels (1 to 3 days)

Intermediate support: 10390

Pivot (key support): 10350

Resistances: 10600/670

Next support: 10230 (medium-term pivotal support –excess)

Conclusion

Maintain bullish bias and we have tightened the short-term pivotal support to 10350 for a further recovery to target the 10600/670 resistance zone in the first step.

However, a break below the 10350 pivotal support is likely to negate the preferred bullish scenario for a choppy decline to test the 10230 excess level of the medium-term pivotal support.

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