Featured Trade DAX is hovering right below key medium term pivotal resistance zone

Short-term technical outlook on Germany 30 Index (Tues, 21 Aug)

Key technical elements

• The on-going rebound of 2.1% from last Wed 15 Aug low of 12112 has led the Germany 30 Index (proxy for the DAX futures) to hover right below a significant resistance zone of 12420/12540. Click here for a recap of our latest weekly technical outlook.
• The 12420/12540 is defined a confluence of elements from lower and higher time frame charts. The pull-back resistance of the recent bearish breakdown of the former major/primary ascending trendline support from Feb 2016 (the major low that formed after the 3rd Chinese Yuan “shock devaluation”), the pull-back resistance of a minor bearish reversal “Head & Shoulders” configuration that has broken down on 10 Aug 2018 and a Fibonacci retracement/projection cluster (see daily & hourly charts).
• The daily RSI oscillator remains negative below its corresponding resistance at the 50-level coupled with the shorter-term hourly Stochastic oscillator that has stared to inch down from an extreme overbought level. These observations suggest that the recent upside momentum of the rebound from 15 Aug has started to wane the Index may resume its medium-term bearish impulsive down leg phase in place since 14 Jun 2018.

Key Levels (1 to 3 days)

Intermediate resistance: 12420

Pivot (key resistance): 12540 (medium-term)

Supports: 12250 & 12128/100

Next resistance: 12890

Conclusion

Therefore as long as the 12540 key medium-term pivotal resistance is not surpassed, the Index is likely to see at least a potential minor bearish reversal to retest the near-term supports of 12250 follow by 12128/100 (28 Jun/15 Aug 2018 swing low areas) in the first step.

On the flipside, a clearance above 12540 negates the bearish tone for another round of upward choppy movement towards the 12890 range resistance in place since 27/31 Jul 2018.

Charts are from City Index Advantage TraderPro