dax maintain bullish bias with a tightened short term pivotal support 1825162016

Daily Outlook, Friday 05 August 2016

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has indeed staged the initial expected minor pull-back towards our predefined intermediate short-term support of 10170 (printed a low of 10180 in yesterday’s European session) before it rebounded post BOE.

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

Today key Eurozone & Germany economic data/releases as follow:

• Germany Factory Orders for Jun @0600GMT (0.6%m/m & -1.5% y/y consensus)

Key elements

• Since its reintegration back above the upper boundary of the “Expanding Wedge” range top (depicted in dotted purple) , the Index has staged a retest and rebounded right on the former upper boundary of the “Expanding Wedge” range top now turns into a pull-back support at 10180/10170 (see 1 hour chart).
• The aforementioned pull-back support of 10180/10170 also confluences with the 61.8% Fibonacci retracement of the recent up move in price action of the Index from 03 August 2016 low to yesterday’s high of 10283.
• The 1 hour Stochastic oscillator has already reached an extreme overbought level which suggests that the Index may see a risk of another round of minor dip in price action below 10280.
• The short-term resistance to watch remains at 10380 which is the upper boundary of the significant descending range in place since 12 April 2015 high follow by the next resistance zone of 10530/650 (see weekly chart)

Key levels (1 to 3 days)

Pivot (key support): 10170

Resistances: 10380 & 10530/650

Next support: 10060 (medium-term)

Conclusion

Maintain bullish bias with a tightened short-term pivotal support. The Index may now see a minor dip in price action first and as long as the tightened daily short-term pivotal support of 10170 holds, the Index is likely to shape another upleg towards the 10380 significant resistance. A break above 10380 may open up scope to propel the Index higher to target the next resistance zone of 10530/650 in the first step.

On the other hand, failure to hold above the 10170 short-term pivotal support may negate the preferred bullish tone to see a deeper pull-back to test the medium-term pivotal support at 10060 (click here for a recap).

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