dax risk of a minor bull trap below 10110 resistance 1817492016

Daily Outlook, Tues 21 June 2016

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has continued to push higher from last Friday, 16 June low of 9431 (+5.9%) into yesterday’s U.S. session after Asian’s session opening gapped up at 9753.

This similar rally can been seem across the board for global equities as risk appetite returned due to fresh opinion polls released on Sunday, 19 June for the upcoming U.K. referendum that indicated the “Remain” camp leading by a slight margin of 1% to 3%.

Today key Eurozone economic data releases as follow:

Germany ZEW Economic Sentiment survey for June @0900 GMT (5.0 estimate)
Germany ZEW Current Situation survey for June @0900 GMT (53.0 estimate)

Key elements

The Index has reintegrated back into the minor triangle range support now at 9906 (depicted in purple).
The 4 hour Stochastic oscillator has flashed a bearish divergence signal at the overbought level which suggests a waning of the upside momentum of the current push up in price action.
Interestingly, current price action is now residing right below (1.03% away) the 10110 medium-term pivotal resistance as per highlighted in our latest weekly technical outlook/strategy yesterday (click here for a recap).
The near-term support to watch will be at 9906 follow by 9720 which is defined by the gap left in yesterday’s Asian opening session and the minor pull-back support of the former swing highs of 15 June to 17 June 2016.

Key levels (1 to 3 days)

Pivot (key resistance): 10110

Supports: 9906, 9720 & 9600

Next resistance: 10350

Conclusion

Risk of a minor bull trap. As long as the 10110 medium-term pivotal resistance is not surpassed and a break below the 9906 level, the Index is likely to see a decline towards the 9720 support with a maximum limit set at 9600 (minor swing low area of 17 June 2016).

However, a break above (daily close above) the 10110 pivotal resistance is likely to invalidate the preferred bearish scenario for a further upside movement to test the next resistance at 10350 (minor swing high of 07 June 2016).

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