DAX30 INDEX (WATCH)

In my last update on DAX30 Index in mid December’15 (DAX30 vs. EURUSD – 14/12/2015), I have mentioned that I expected some upward short-term consolidation to 10’630 levels prior of another down leg to September’15 (9’900) resp. August’15 lows (9’350).

The upward rebound immediately followed the day after my post, kept on for two weeks and found resistance (10’860, +7%) at the major downward sloping trendline (blue) starting off the all-time high (12’390 – April 2015). A flag was built accordingly which is the most typical consolidation pattern, suggested of a short break before the trend resumes its precedent direction (bearish in this case).

DAX30 then fell like a stone and even dropped below its significant support at 9’900 area to 9’810 and is now trading at 9’980 which is still negative (-2.29%) vs. yesterday’s close.

Given the recent flag formation in combination with a fibonacci retracement extension, I expect DAX30 to proceed its downtrend to at least to 9’350.

Why 9’350? Firstly, 9’350 is the projected price target of the fibonacci extension and secondly it is the area of the absolute Aug’15 (9’338) and Sep’15 (9’325) lows acting as major support zone.

Meanwhile, on the price side, we have new intermediate lows in place, but momentum has not (yet) confirmed these price lows, so this relationship is currently diverging. Nevertheless, I expect this divergence not to remain for long and estimate some small consolidation followed by another downleg to August / September lows within next week.

Conclusion: In DAX30 Index, a rebound to max. 10’200 (38.2% Fibonacci retracement zone) is possible, but do not chase upside. Instead, sell into weakness. Projected downside price target: 9’350 (-500 Pts. / roughly -5%).

DAX30-07012016-daily

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