dax daily outlook fri 20 may 2016 potential residual last push up still in progress towards 9980 wit

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has continued to trade within a minor triangle range configuration in place since 06 May 2016 low. Yesterday, the Index has tested the lower limit of the triangle range at around 9800 before it staged the expected residual push up in the U.S. session but fall short of our target (intermediate resistance) at 9980.

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

Today key Euro zone economic data releases will be as follow:

1) Germany Producer Price Index for Apr @0600GMT

Key elements

The Index is now inching towards the upper boundary of the minor triangle range configuration (highlighted in purple) which is closed to the short-term intermediate resistance of 9980.
The 9980 intermediate resistance also confluences with a Fibonacci cluster.
The key short-term pivotal resistance remains at 10026/40.
The minor triangle range support is now at 9780. The next short-term support will be at 9620 as per defined by the 50% Fibonacci retracement of the rally from 11 February 2016 low to 21 April 2016 high.

Key levels (1 to 3 days)

Intermediate resistance: 9980

Pivot (key resistance): 10026/40

Supports 9780/30 & 9620

Next resistance: 10165 (weekly pivot).

Conclusion

As long as the 9830 minor support holds, the Index may still see a final “residual push up” to test the intermediate resistance at 9980 with a maximum limit set at the 10026/40 daily short-term pivotal resistance. Thereafter, a potential downleg is likely to occur for a retest on the triangle range support at 9780/30 in the first step.

However, a clearance above the 10026/40 pivotal resistance may negate the bearish tone to see a further squeeze up to test the 10165 weekly pivotal resistance

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