Yesterday minutes from the Fed’s July FOMC meeting were released earlier than expected. The report showed that “most” Fed officials were in agreement that an Interest Rate was still not warranted, but conditions “were approaching that point.” When that point is, is anyone’s guess. Fed officials also stated they were not committed to raising rates in the midst of a global slowdown. These mixed messages were ill-received with stock indices continuing to sell off. During today’s Asian session, Hong Kong’s Hang Seng Index fell as much as 2% at one point to an 8-month low and Japan’s Nikkei fell 0.7% – see article here
Looking at the Hourly chart of the DAX below, one can see the market moved lower in trading yesterday and coming close to hitting my price target of 10651 in yesterday’s article, which is the lows from July, just a few pips shy at 10657. Today, the market stalled before collapsing through the next Bullish support, the 10616/10592 zone.
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Where to next? Looking at the Weekly chart of the DAX below, one can see the Bull market from October 2014 – April 2015. The 50% retracement level, a favourite amongst value investors, is soon approaching, coming in at 10378.
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CONCLUSION – BEARISH
For Bulls, the Daily 200 moving average at 111013 needs to be reclaimed. For risky traders intraday, the 10616 level needs to be taken out limiting risk to 10592.
For Bears, if the freefall continues expect buying pressure at the aforementioned level of 10378, beyond that 10225. 10225 is the price where the DAX started to skyrocket from after the ECB announced QE back in late-January. Intraday, levels to short against with defined risk are into the 10616/10592 zone, 10651 (July lows), the Daily highs at 10688 and pullbacks into the 100 & 200 MA’s on the 5 minute chart.
Bearish targets :-
- 10483 (Extension of Daily range – 22 day avg. 206 pips + Daily S2 Pivot 10481)
- 10378 (Weekly 50% retracement Oct 14 – April 15)
- 10300 (Daily S3 Pivot)
Bullish targets :-
- 10616 (Top end of key 10616/106592 zone)
- 10651 (July lows)
- 10688 (Daily high)