The DAX is somewhat volatile in trading today as the bulls & bears wrestle over price. Markets will be watching any developments from Europe over the next two days and the U.S. later today with the FOMC minutes at 7pm GMT.
In Europe, Greek Prime Minister Alexis Tsipras has travelled to Russia for a two-day trip to meet Kremlin strongman Vladimir Putin in Moscow. The visit has fuelled EU fears that cash-strapped Athens is cosying up to Russia as they currently battle to unblock a rescue package from the EU and IMF. However, analysts say that while the visit might see Moscow lift an embargo on Greek fruit, (imposed as part of a wider ban on Western products in response to sanctions over Ukraine) overall it is more about political grandstanding aimed at pressuring Europe rather than a serious shift in policy.
Looking at the Hourly chart below, one can clearly see that price moves are at a stalemate. Although price has indeed held up since breaking above its 100 moving average (blue line) two days ago, there has not been much advancement in price either. What looked like a positive start on the European open was soon dampened by negative news out of Germany. German industrial orders, a key measure of demand for goods in Europe’s top economy, fell again in February, a -0.9% month-on-month decline, following a sharp 2.6% drop in January, according to revised figures.
(click to enlarge)
CONCLUSION – NEUTRAL
I am somewhat hesitant to be buyer at these levels, even if price breaks prior highs. This occurred yesterday, but gained a measly 26 pips on the breakout, rising to 12148 before eventually falling back. As mentioned yesterday, there is a gap below at 12035/12006, which is yet to be filled. This puts pressure on the bulls. Not to mention, market activity should be moderately rangebound today ahead of the U.S. FOMC minutes at 7pm GMT.
For bulls, a close of the gap at 12006 is also the level at which the Hourly 100 MA currently resides. This is a sensible area to define risk. Be wary though if price flirts with this level ahead of the FOMC, as negative news out of the U.S. could see markets repeat Friday’s collapse.
For bears, shorting opportunities reside against the high from yesterday at 12148, or on a few successive closes below the Hourly 200 MA.
Bearish targets :-
- 12006 (Gap fill, Hourly 100 MA & Daily S1 Pivot at 12004)
- 11919 (Extension of daily range – avg. 210 pips last 22 days & Daily S2 Pivot 11923)
- 11850 (Key resistance zone and Daily S3 Pivot)
Bullish targets :-
- 12200
- 12222 (all time high & close to Daily R2 Pivot 12231)
- 12266 (Extension in daily range)