Markets have retraced much of their losses from late last week after dovish stances from the U.S. and China. On Friday, U.S. Federal Chair Janet Yellen reaffirmed that U.S. rates would likely start rising later this year but emphasized the pace of tightening would be gradual and data-dependent. This will come more into focus this Friday when the monthly U.S. jobs report is released. Economists are expecting higher than expected data. That would be the 13th straight month of gains, a growth story last seen back in 1994 – 1995.
Meanwhile in Asia, markets rose Monday after Hong Kong and Shanghai were boosted by hopes for more Chinese economic stimulus.
Markets were further stabilised as foreign ministers of Iran and United States, Britain, France, Germany, Russia and China met on Monday. They aim to establish a preliminary accord less than two days before their deadline to outline a deal to end Tehran’s nuclear standoff with the West.
Moving onto the DAX, it has once again soared to the upside. From a fundamental perspective, this has be elevated from the U.S. and Chinese dovish monetary stances as aforementioned. From a technical standpoint, after three days of gyrating movements, price has finally reclaimed its Hourly 200 moving average (green line in the chart below).
(click to enlarge)
CONCLUSION – BULLISH
Although investors will have to keep a watchful eye on Greece due to its talks with international creditors, where the parties are struggling to come up with a list of acceptable reforms – all other fundamentals are pointing to the upside.
For bulls, price needs to stay above the Hourly 200 MA, which currently stands at 11915. This area also come in close to the 61.8% move in today’s trading so far at 11927.(see 5 min chart below – move Fib level up as appropriate). This would be a good area to define risk for buying opportunities.
For bears, price needs to close and hold for a few bars below the Hourly 200 MA. Ideally, it actually needs to get below the 11850 zone which again held quite well in Friday’s trading.
(click to enlarge)
Bearish targets :-
- 11871 (Daily Pivot)
- 11850 zone (Marked in yellow on Hourly chart above)
- 11791 (Daily S1 Pivot)
Bullish targets :-
- 12088 (Prior high)
- 12104 (Daily S3 Pivot)
- 12222 (All time highs)