dax short term technical outlook potential bullish breakout above 10500 support 1833762016

Tues, 11 October 2016

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has continued to push higher as expected as “risk-on” behaviour prevails. The Index is now right below the minor “Expanding Wedge” range top in place since the 15 August 2016 high.

Please click here for a recap on our latest weekly technical outlook for the major stock indices published yesterday, 10 October 2016.

Key German economic data releases/events for today

• ZEW Current Situation Survey for Oct @0900 GMT (55.5 consensus)
• ZEW Economic Sentiment Survey for Oct @0900 GMT (4.0 consensus)

Key elements

• Based on the Elliot Wave Principal and fractal analysis, the current 4.5% rally from the minor swing low of 10184 printed on 30 September 2016 (potential end of the “Expanding Wedge”) has started to evolve into a bullish impulsive structure where a potential bullish breakout is imminent after a third retest on the “Expanding Wedge” range top.
• The key short-term support now rests at 10500 which is defined by the lower boundary of a short-term ascending channel in place since 30 September 2016 minor swing low.
• The next significant short-term resistance after 10700 stands at 10840/900 which is defined by the upper boundary of the aforementioned ascending channel and the 1.00 Fibonacci projection of the recent up move from 30 September 2016 low.
• Momentum studies remain positive as the daily RSI oscillator continues to inch upwards above the 50% level.  In addition, the short-term (hourly) Stochastic oscillator has just reversed up from its oversold region.

Key levels (1 to 3 days)

Pivot (key support): 10500

Resistances: 10700 & 10840/900

Next support: 10230 (medium-term pivot)

Conclusion

As long as the 10500 short-term pivotal support holds, the Index is likely to shape a potential bullish breakout above the 10700 “Expanding Wedge” range top for further potential up move to target the next resistance at 10840/900 in the first step.

On the other hand, a break below the 10500 short-term pivotal support may invalidate the preferred direct rise scenario for another round of choppy decline to retest the 10230 medium-term pivotal support.

Charts are from City Index Advantage TraderPro

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