dax maintain bullish stance for further potential push up 1827992016

Daily Outlook, Wednesday 24 August 2016

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has staged the expected recovery right above the predefined medium-term pivotal support of 10380 as it rallied by close to 1% to print a high of 10626 in yesterday’s late European session.

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

Today key Germany/Eurozone economic data releases as follow:

Germany Q2 GDP @0600 GMT (3.1% y/y & 0.4% q/q consensus)

Key elements

The Index has continued to inch upwards after a test on the lower boundary (10380) of the medium-term bullish ascending channel in place since 06 July 2016 low. The upper boundary of the ascending channel stands at 11050 which also confluences with a Fibonacci cluster at 10990/11050 (see daily chart).
Based on the Elliot Wave Principal/fractal analysis, we are still in favour that the Index is undergoing the potential extended 5^th wave of the intermediate degree bullish impulsive wave 5/ that is in progress since medium-term swing low of 10092 seen on 03 August 2016 (end of intermediate degree corrective wave 4/). Current price action is now likely undergoing the minor degree bullish impulsive wave 3 in place since this Monday, 22 August low of 10387 with a minimum potential end target (wave equality of minor degree wave 1) at 11080 which is closed to the upper boundary of the aforementioned ascending channel.
Momentum indicators are also supporting the preferred bullish potential Elliot Wave count as the daily (medium-term) RSI oscillator has manage to stage a rebound right at the ascending trendlline support (depicted in light green) and held above the 50% level. These observations suggest the upside momentum of price also has resurfaced (see daily chart).

Key levels (1 to 3 days)

Intermediate support: 10505

Pivot (key support): 10380

Resistances: 10806 & 10990/11050.

Next support: 10090

Conclusion

Maintain bullish stance. As long as the 10380 medium-term pivotal support holds, the Index is likely to shape a further upside movement to retest the minor swing high at 10806 in the first step before targeting the more significant resistance zone of 10990/11050.

However, failure to hold above 10380 key medium-term support is likely to invalidate our preferred medium-term bullish view to see the start of a corrective decline but not a bear market crash at this juncture. The next support rests at 10090 which is defined by the medium-term swing low area of 03 August 2016 and close to the 50% Fibonacci retracement of the entire up move from 24 June 2016 low to last week high of 10806.

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