After drifting lower in yesterday’s session, the DAX has collapsed in trading today. All eyes were on a Eurogroup meeting in Brussels yesterday as finance ministers gathered to discuss the future of Greece.
According to reports from the day, there are ‘signs of progress in negotiations between Greece and its creditors but more work is needed to close a cash-for-reform deal.’ Even though Greece said on Monday it had repaid about €750 million to the International Monetary Fund, anxiety still weighs on markets as investors remain worried that Athens will eventually run out of cash and default on its debts. Eurozone ministers stated that ‘Greece could not hope for any of the final €7.2 billion tranche of its €240 billion bailout until it makes key reforms.’ – see full article here.
The DAX has further sold off after comments out of Europe this morning. In a monetary conference in Zurich today, William Dudley, president of the New York Fed, made some remarks over the future of U.S. interest rates. The stance was very much that rates will indeed rise, but was unable to give an exact timeline at present. However, he did indicate that a rate hike for this year is still on the table as he ‘applauded improved communications by the U.S. central bank, saying: “Market participants now seem to share” policymakers’ individual forecasts “that lift-off is likely to begin sometime later this year.” – see full article here.
Looking at an Hourly chart of the DAX below, one can see the effects of the bearish sentiment present in the markets today. Price initially found resistance against the key 11606/11595 zone, but eventually broke through this bullish floor of support. It met more support from the Hourly 100 & 200 moving averages (blue & green lines), next was the 11467/11457 zone, with price finally bouncing at 11447. This area is the 50% retracement in price from the low last week of 11163 to Friday’s high of 11731.
(click to enlarge)
CONCLUSION – BEARISH
Bulls needed to attack the key 11776/11751 area yesterday and recapture this bearish zone of dominance. The DAX has fallen through its key 11606/11595 zone, it’s 11467/11457 and is at present below its Hourly 200 MA.
For bulls, levels to lean against are 11400 and 11380 (61.8% level – see chart above). If price falls further in trading today, expect to see buying activity at the 11328/11316 zone, and if that fails to hold, then the 11193/11174 zone. For more risk averse traders, buying on a close above the Hourly 200 MA, but ideally above the 11606/11595 level, as that will be the line in the sand for bears today.
For bears, shorting opportunities reside on rallies into the 11467/11457 zone or into the the Hourly 200 MA. If price continues to move lower be wary of resistance ahead at 11328/11316.
Bearish targets :-
- 11380 (61.8% level)
- 11328 (Key Zone)
- 11300
Bullish targets :-
- 11600
- 11646 (Daily high & close to Daily Pivot of 11640)
- 11684 (Daily R1 Pivot)