In yesterday’s trading the DAX finally rolled over after failing to move above 11600 last Friday and again on Monday. It broke through prior support at the 11467-11460 area and tumbled further. Price eventually found support against the key psychological area of 11400 and the Daily S2 Pivot (which I mentioned as a bearish intraday target in yesterday’s article http://theshielreport.com/2015/03/10/dax-intraday-levels-10th-march/ ) .
Looking at the Hourly chart below, one can see this 11400 level also came in at around the Hourly 200 moving average at 11408. Price failed to close below the 200 MA and moved back higher. This is the sixth time this month, so the 200 MA proves to be an area of key support for the bulls to lean against.
(click to enlarge)
Earlier this morning ECB President Mario Draghi was speaking at Frankfurt University at the Watchers XVI conference organised by the Centre for Financial Studies. He commented that the slowdown has reversed and recovery in the Eurozone will gradually broaden. That the ECB can and will stabilize inflation through the Public Sector Purchasing Program (official name for European Quantitative Easing). Also, that Governments in member states need to swiftly implement credible reforms. The DAX moved higher off these comments eventually breaking through the key resistance level 11600.
Price has extended far beyond its 22 day trading range (152 pips). The high so far comes in at 11823, a total range of 325 pips for the day. How much further price can move beyond that level today is debatable, as the last time the Daily range moved 300+ pips was off the back of the ECB QE announcement, back at the end of January!
CONCLUSION – BULLISH
I wouldn’t be buying at these overextended levels – 11823. As aforementioned, its Daily trading range is at levels not seen since the QE announcement and it is far beyond its Daily R3 Pivot of 11777 implying the Indice is currently overbought on the day.
I would be looking for pullbacks into the 5 minute 100 moving average (blue line in the chart below), below that look for strong support at the 50% retracement level currently sitting at 11667.
(click to enlarge)
Bearish targets :-
- 100 moving average on 5minute chart
- 11700
- 11667 (50% retracement)
Bullish targets :-
- 11841 (Weekly R2 Pivot)
- 11900