dax daily outlook tues 26 apr 2016 10360 resistance to cap potential push up before another potentia

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has pierced below its former short-term ascending trendline that has linked up the higher lows since 08 April 2016 low @2m.

This breakdown in price action represents further potential weakness ahead at least in the short-term (1to 3 days).

Key elements

• In the late U.S. session yesterday, the Index has tried to recover from its European low at 10227 but it failed to make any breakthrough above the pull-back resistance of the former ascending trendline bearish breakdown (in dotted red).
• The pull-back resistance of the former ascending trendline is now at 10360 which also coincide with the former minor range bottom formed last Thursday/Friday.
•  The short-term significant support rests at 10106 which is defined by the former range top of 21/23 March 2016 and a Fibonacci cluster (38.2% retracement of the up move from 08 April 2016 low @2am to last Friday, 21 April 2016 high of 10527 + 0.764 projection of the down move from 21 April 2016 high of 10527 to 25 April 2016 low of 10227 projected from the 10360 resistance).
• The hourly (short-term) Stochastic oscillator has started to inch upwards and still has room for further potential upside before reaching its extreme overbought level. These observations suggest a short-term push up in price action of the Index.

Key levels (1 to 3 days)

Pivot (key resistance): 10360

Supports: 10227 & 10106

Next resistance: 10630

Conclusion

Short-term technical elements have turned bearish but a short-term initial push up cannot be ruled out at this juncture given the above mentioned observations highlighted on the hourly Stochastic oscillator.

The potential push up is likely to be capped by the daily short-term pivotal resistance at 10360 before another down leg occurs to retest 10227 before targeting the 10106 support.

However, a clearance above the 10360 short-term pivotal resistance may damage bearish scenario to see an extension of the current rally for a potential last push up towards the next resistance at 10630 (the critical zone of the upper boundary of a long-term descending channel in place since 12 April 2015 high, click here for more details as per highlighted in our latest technical weekly outlook/strategy).

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