dax vulnerable for a short term bearish breakdown 1844892017

Short-term Technical Outlook (Tues, 28 Feb 2017)

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has traded sideways in the current European session today, 28 February 2017 after its 2.5% decline from the predefined significant resistance of 12020 (click here for recap on our latest weekly technical outlook published yesterday).

Interestingly, short-term technical elements have turned bearish.

Key technical elements

• From its 23 February 2017 high of 12015, the Index has started to evolve in a bearish descending channel with its upper boundary at 11870 and lower boundary at 11565.
• The upper boundary of the aforementioned descending channel confluences with the 50% Fibonacci retracement of last week’s decline from 12031 high to last Friday, 24 February 2017 low of 11719.
• The hourly Stochastic has continued to inch downwards and still has some room left to manoeuvre to the downside before it reaches the extreme oversold level. This observation suggests that downside momentum of price action remains intact.
• The intermediate support rests at 11700 which is defined by the ascending trendline from 09 November 2016 low and the minor swing low area of 17 February 2017.

Key levels (1 to 3 days)

Pivot (key resistance): 11870

Supports: 11700 & 11600

Next resistance: 12020

Conclusion

As long as the 11870 short-term pivotal resistance is not surpassed, the Index now appears vulnerable for a potential bearish breakdown below the 11700 intermediate support to open up scope for a further slide to target the next support at 11565 in the first step.

However, a break above 11870 is likely to invalidate the preferred bearish scenario for another round of squeeze up to retest the 12020 significant medium-term resistance.

Charts are from City Index Advantage TraderPro

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