dax daily outlook tues 12 jan 2016 signs of recovery watch the 9960 resistance 1792872016

(Click to enlarge charts)

Key elements

The Germany 30 Index (proxy for the DAX) has managed to hold above the 9800/9750 long-term key support despite last week’s rout (click here for more details in our latest weekly strategy/outlook).
On the shorter-term, the Index has started to show signs of bearish exhaustion through as it has traced out an impending bullish “Inverse Head and Shoulders” pattern. This is a positive observation as a bullish chart pattern has formed right at the 9800/750 key long-term support after a horrendous performance seen last week.
The neckline resistance of the “Inverse Head and Shoulders” pattern stands at 9960 with the exit potential at 10330 which also confluences closely with the 50%/61.8% Fibonacci retracement of the recent steep move from 30 December 2015 high to 11 January 2015 low.

Key levels (1 to 3 days)

Intermediate support: 9800

Pivot (key support): 9750/570 (excess)

Resistance: 9960 & 10330

Next support: 9300

Conclusion

The Index has started to show signs of recovery above the key long-term support at 9750/570 (excess). A break above the neckline resistance of the impending short-term “Inverse Head and Shoulders” is likely to add impetus for a potential further push up to target the next resistance at 10330.

On the flipside, a break below 9570 may invalidate the expected recovery scenario for a further decline to test the 29 September 2015 swing low at 9300.

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