DAX suffered a huge collapse in price yesterday falling from 11466 to 11255, where a small base started to form. Price had been over extended for a few days prior, and a big divergence started to form (see earlier post here http://theshielreport.com/2015/03/03/dax-intraday-levels-3rd-march-2015/ ).
Looking at the 5 min chart below, note how the price failed in a few key areas. First was Monday’s high which came in at 11454. After failing to move above this level in force, price soon quickly rotated to the downside, unsuccessfully holding against the 100 & 200 moving averages (blue & green lines in the chart below). When buyers attempted a small retest of this level but could not get above the 200 ma at 11418, bears began to gain control of the day’s trading.
The area between the Daily S1 Pivot at 11379 and Monday’s trading lows of 11367 became a firm area of support. When price eventually broke through this level…… it tumbled – FAST. Price fell to 11255. A total of 116 pips in just under two hours. To put that in some perspective the average trading range over the last 22 days has been 153 pips over the course of a DAY. (11255 was a key ceiling of resistance in trading last week during the Greece talks, eventually breaking to the upside last Thursday.)
Price drifted sideways during the Asian session, and slowly picked up at the German open (7am GMT). Momentum continued after the London open (8am GMT), but the 38.2% of yesterdays move (11454 to the low of 11255) put pressure on the bulls pushing price lower once again. Price then accelerated off the back of weaker than expected PMI data out of Germany coming in at 54.7 vs an expected 55.5 and European PMI data at 53.7 vs 53.9 expectation. It tumbled further breaking through the 100 & 200 ma at 11298 , yesterday’s floor of 11255, the Hourly 200 ma at 11235, before eventually bottoming just below the key 11200 level coming in 11193. Price rocketed back to the upside, closing above the Hourly 200 ma which has so far held. Looking at the chart below price is trading between the Hourly 100 & 200 moving averages. For price to resume it’s trend lower it needs to now close below the 200 ma putting the bears firmly in charge.
CONCLUSION – BEARISH
Price should continue to trend lower today, so shorting pullbacks would be my view (see chart below). The 11346 is a key price. This level is the Hourly 100 ma, and a break above will switch the bias from Bearish to Bullish. However I would be surprised to see this happen today, as the average trading range for the last 22 days is 153 pips and the price has so far moved 135 pips. On a break of today’s high, that only leaves room for an extension of a measly 18 pips which also comes in at 11346.
Some Bearish targets :
- 11193 (todays low)
- 11175 (extension in todays trading range of 135 pips vs 22 day average of 153)
- 11137 (Daily S2 Pivot)