Featured Trade: DAX pushed up towards key short term resistance

DAX may see a minor bearish reversal below 12140 key short-term resistance

Short-term technical outlook on Germany 30 (Thurs, 13 Aug)



Key technical elements

  • The on-going up move of 2% from 11 Sep 2018 low of 11862 is now hovering right below a key short-term resistance of 12140 which is defined by the former swing low areas of 27 Jun/15 Aug 2018 and a Fibonacci retracement/projection cluster (38.2% retracement of the recent decline from 28 Aug to 11 Sep 2018 low & 1.00 projection from 11 Sep 2018 low) (refer to 4 hour & 1 hour charts).
  • The hourly Stochastic oscillator has reached an extreme overbought level of 97 coupled with the 4 hour Stochastic oscillator that is hovering at the overbought region as well. These observations suggest that the short-term upside momentum of price action is overstretched where the Index now faces a risk of a short-term decline at this juncture.
  • The short-term support rests at 11900 which is defined by the minor swing lows of 07/11 Sep 2018.

Key Levels (1 to 3 days)

Pivot (key resistance): 12140

Support: 11900

Next resistance: 12540 (medium-term pivot)

Conclusion

The recent push up in the Germany 30 Index (proxy for the DAX futures) has reached a key short-term inflection level of 12140 coupled with overbought conditions seen in the short-term (4/1-hour) Stochastic oscillators. Therefore, as long as the 12140 key short-term pivotal resistance is not surpassed, the Index may see a push down to retest the 11900 intermediate support in the first step.

However, a clearance above 12140 invalidates the bearish scenario for a further squeeze up to target the 12540 medium-term pivotal resistance (also the upper boundary of the descending channel from 14 Jun 2018).

Charts are from City Index Advantage TraderPro



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