Financial Markets have continued their slide lower from yesterday. The DAX sold off sharply in trading yesterday moving 269 pips to the downside. Price finally met support at 11930 (prior day’s support before rocketing to the upside). Buyers stepped in at this level, eventually finding resistance at the 38.2% of the days move down (12196-11927). Price action consolidated during the Asian session moving sideways, before another attempt on the 38.2% by the bulls during the European open. But alas, it failed once again, and swiftly sold off.
It broke through it’s 100 & 200 MA (blue and green lines in chart below) on the 5 min time frame, testing the prior day’s low, bounced, retested the 200 MA area at 12000 and rolled back over – with force. It took out yesterday’s low at 11927. Then 11900. Then the strong cluster of support around 11850 (yellow box in chart below). Eventually stopping at 11813.
(click to enlarge)
CONCLUSION – NEUTRAL
Only a few hours remain until the F.O.M.C. at 19:00 GMT. Markets will finally know if the Fed has dropped the word ‘patience’ and is looking to once again raise Interest Rates.
For bears, 11775 – 11750 will be a key area to watch if the market continues lower. This was a strong area of support in last week’s trading which the bears failed to break over the course of several days. The 11775 price is also the Weekly Pivot. AND it’s the Daily S2 Pivot. The Hourly 200 moving average (green line in chart below) also resides in this area, currently at 11765. A loss through these levels will be very bearish indeed, price has not successfully moved below the Hourly 200 MA for over five weeks.
For bulls, the Hourly 100 MA (blue line in chart below) now becomes an area of focus. Price needs to reclaim this level (currently at 11957) for several bars, for bears to be shaken out of their short positions and new buyers to step in with confidence.
Use the Hourly 100 & 200 MA’s as levels to define your risk against in trading today.
Bearish targets :-
- 11775/11750 (support area last week – see chart above)
- 11623 (Daily S3 Pivot)
- 11606 (resistance area from 2 weeks ago, now support – see chart above)
Bullish targets :-
- 11222 (all time high )
- 12315 (Daily S2 Pivot)
- 12400