Nothing out of the ordinary was announced at yesterday’s ECB press conference. Mario Draghi commented how the QE program is starting to work, so much so by raising it’s inflation forecast to 0.3%. Not much light was shed on the Greek debacle of debt repayment – “We are not either interfering or in any way taking a stance with respect to the current negotiation” and “The Governing Council of the E.C.B. wants Greece to stay in the euro” – read full article here
The DAX remained somewhat steady after this conference yesterday remaining above the key 11316 level. However in trading today, the German Index has taken a further hit after news from Greece. Prime Minister Alexis Tsipras has ‘rejected proposals by European leaders and the International Monetary Fund to help unlock more aid, instead backing his own government’s plans’ – read full article here
Looking at an Hourly chart of the DAX below, one can see price did rally yesterday but met firm resistance into the 11467/11457 and Hourly 100 moving average (blue line) as mentioned in yesterday’s article.
(click to enlarge)
CONCLUSION – NEUTRAL
Market sentiment is somewhat confused. After price plummeted though the key 11316 zone in trading today it has held into the 11193/11174 zone. This area comes in close to 11163, the lows from early May, and a level to watch for in trading today. After Draghi’s somewhat upbeat comments yesterday and Tsipras’ downbeat stance today, investors await fresh news. We have the first installment of Greece’s May repayment schedule to the IMF tomorrow along with U.S. Nonfarm payrolls to contend with. A more simplified outlook on the DAX in trading today will be, bearish below 11200 and bullish above 11500.
For bulls, the levels with definied risk will be the 11194/11174 zone and 11163 level. If price collapses through those price points, the next major resistance will be 11018/10986. For risk averse, risk can be defined above the 11467 level but ideally the Hourly 200 MA (green line in chart above)
For bears, price needs to remain below it’s Hourly 100 MA in trading today. Expect to see shorts enter the market on retracements into this level and of course the 11328/11316 zone. For risk averse the 11163 level needs to be taken out.
Bearish targets :-
- 11163 (May low)
- 11081 (Daily S3 Pivot)
- 11018/10986 zone
Bullish targets :-
- Hourly 100 MA
- 11514 (Yesterday’s High & Daily R1 Pivot)
- Hourly 200 MA