dax still holding above key 10380 support for a potential recovery 1830162016

Daily Outlook, Wed 14 September 2016

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has staged the expected pull-back yesterday after a sharp up move reaction (2.2%) seen on Monday, 12 September.

However, yesterday’s pull-back in price action came in slightly beyond our expectation as it tumbled by 1.8% and almost wiped out the gains seen on Monday, 12 September. Most importantly, the Index has retested the 10380 medium-term pivotal support and held above it.

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

Today key Germany/Eurozone economic data releases as follow:

• Eurozone Industrial Production for Jul @0900 GMT (-07% y/y consensus)

Key elements

• Yesterday’s drop in price action has managed to hold above the lower boundary of the medium-term bullish ascending channel in place since 24 June 2016 which also confluences with the 10380 medium-term pivotal support.
• On the shorter-term as seen from the hourly chart, the Index is now being supported by an ascending trendline (depicted in green).
• The hourly Stochastic oscillator has just inched up from its oversold region which suggests a revival of upside momentum at this juncture.
• 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 (ECB) to yesterday low of 10310.

Key levels (1 to 3 days)

Pivot (key support): 10380 (medium-term)

Resistance: 10600/670

Next support: 10100

Conclusion

Maintain bullish stance for a potential recovery to target the 10600/670 intermediate resistance holding above the 10380 medium-term pivotal support.

However, a break below the 10380 pivotal support is likely to invalidate our preferred recovery scenario to kick start a deeper correction towards the next support at 1010.

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