dax vulnerable for a minor bearish breakdown below 11850 1845912017

Short-term Technical Outlook (Wed, 08 Mar 2017)

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has continued to inch lower after it failed to recapture the 12000 psychological level added by woes from European health care stocks. The health care sector was the worst performer yesterday as the benchmark STOXX Europe 600 Health Care Index declined by 1.05%.

Key technical elements

• The Index has already broke below its minor ascending trendline support from 24 February 2017 low now turns pull-back resistance at 11980.
• The key short-term resistance now stands at 12020 which is defined by the former swing high area of 22/23 February 2017 and the 61.8% Fibonacci retracement of the recent decline from 02 March 2017 high of 12100.
• It appears that the Index has stage a failure bullish breakout above 12020 on 01 March 2017which highlights a potential “bull trap” scenario.
• The next significant short-term support rests at 11730/1700 which is defined by the swing low areas of 17/24 February 2017 and the 23.6% Fibonacci retracement of the rally from 05 November 2017 low to 02 March 2017 high.
• The hourly Stochastic oscillator has just exited from its oversold region which suggests that the Index may stage a minor rebound at this juncture as yesterday’s downside momentum of price action is being overstretched.

Key levels (1 to 3 days)

Intermediate resistance: 11980

Pivot (key resistance): 12020

Supports: 11850 & 11730/700

Next resistance: 12200 (medium-term pivot)

Conclusion

The Index may see a minor rebound to retest the 11980 intermediate resistance and as long as the 12020 short-term pivotal resistance is not surpassed, the Index is likely to shape a bearish breakdown below the 11850 support (congestion zone from 27 Feb/28 Feb 2017) to target the next support at 11730/700.

On the other hand, a clearance above 12020 is likely to invalidate the preferred bearish tone for a squeeze up to test the 12200 medium-term pivotal resistance.

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