dax maintain bullish stance for further potential push up 1827992016

Daily Outlook, Wednesday 24 August 2016 (Click to enlarge charts) What happened earlier/yesterday The Germany 30 Index (proxy for the DAX futures) has staged the […]

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By :  ,  Financial Analyst

Daily Outlook, Wednesday 24 August 2016

DAX (daily)_24 Aug 2016

DAX (1 hour)_24 Aug 2016(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has staged the expected recovery right above the predefined medium-term pivotal support of 10380 as it rallied by close to 1% to print a high of 10626 in yesterday’s late European session.

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

Today key Germany/Eurozone economic data releases as follow:

  • Germany Q2 GDP @0600 GMT (3.1% y/y & 0.4% q/q consensus)

Key elements

  • The Index has continued to inch upwards after a test on the lower boundary (10380) of the medium-term bullish ascending channel in place since 06 July 2016 low. The upper boundary of the ascending channel stands at 11050 which also confluences with a Fibonacci cluster at 10990/11050 (see daily chart).
  • Based on the Elliot Wave Principal/fractal analysis, we are still in favour that the Index is undergoing the potential extended 5th wave of the intermediate degree bullish impulsive wave 5/ that is in progress since medium-term swing low of 10092 seen on 03 August 2016 (end of intermediate degree corrective wave 4/). Current price action is now likely undergoing the minor degree bullish impulsive wave 3 in place since this Monday, 22 August low of 10387 with a minimum potential end target (wave equality of minor degree wave 1) at 11080 which is closed to the upper boundary of the aforementioned ascending channel.
  • Momentum indicators  are also supporting the preferred bullish potential Elliot Wave count as the daily (medium-term) RSI oscillator has manage to stage a rebound right at the ascending trendlline support (depicted in light green) and held above the 50% level. These observations suggest the upside momentum of price also has resurfaced (see daily chart).

Key levels (1 to 3 days)

Intermediate support: 10505

Pivot (key support): 10380

Resistances: 10806 & 10990/11050.

Next support: 10090


Maintain bullish stance. As long as the 10380 medium-term pivotal support holds, the Index is likely to shape a further upside movement  to retest the minor swing high at 10806 in the first step before targeting the more significant resistance zone of 10990/11050.

However, failure to hold above 10380 key medium-term support is likely to invalidate our preferred medium-term bullish view to see the start of a corrective decline but not a bear market crash at this juncture. The next support rests at 10090 which is defined by the medium-term swing low area of 03 August 2016 and close to the 50% Fibonacci retracement of the entire up move from 24 June 2016 low to last week high of 10806.


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