European equity markets have rallied this morning off the back of U.K. news. Today the votes are being counted for the U.K. general election. Anxiety over the future of the U.K. economy from investors & traders alike have subsided in trading today. With only a few seats left to count, it looks like the Conservative Party will hold a majority and party-leader David Cameron will continue to govern Britain. The FTSE has rallied strongly and Sterling has had its biggest gain since 2009. All of this exuberant confidence has spilled over into European equities, with the DAX being up 0.61% on the day.
Later today, we have the U.S. Non-farm payrolls report release at 13:30. This is a closely anticipated event as data released on Wednesday with the ADP employment report showing only 169,000 jobs created versus expectations of 200,000. This is far below the 224,000 jobs expected from today’s official report. Not only will the number reported be an indicator as to the strength of the U.S. economy, it will also for investors, be a clue as to the Fed’s stance on Interest Rates. A stronger than expected number could help prompt the U.S. Central Bank remaining on course to raise interest rates sometime this year.
Looking at an Hourly chart of the DAX below, one can see price didn’t look back after holding against the 11193/11174 zone. Next it managed to break above the 11328/11316 zone and eventually found resistance above coming into the Hourly 100 moving average (blue line in the chart below). Price broke above this level and through the 11467/11457 zone this morning eventually finding resistance at the Hourly 200 MA (green line). Price is now trading between these two train tracks with price so far holding against the Hourly 100 MA.
(click to enlarge)
CONCLUSION – NEUTRAL
Price is consolidating within the Hourly 100 & 200 MA’s and will gather momentum on a break above or below these levels. This could be fueled by the release of NFP report at 13:30, so keep your eyes peeled around that time.
For bulls, price needs to get back above the 11467/11457 zone but ideally attack and close above the Hourly 200 MA. This would be an easy area for risk averse investors to lean against. On a break below the Hourly 100 MA, expect value investors to step in at the 11328/11316 zone.
For bears, shorting opportunities lay against rallies into the Hourly 200 MA or or a break below the Hourly 100 MA, using the 11467 level as a stop.
Bearish targets:-
- 11331 (Daily Pivot & close to 11328/11316 zone)
- 11272 (Extension in Daily range – 22 day avg. 250 pips)
- 11224 (Daily S1 Pivot)
Bullish targets :-
- 11515 (Hourly 200 MA)
- 11607 (Daily R2 Pivot & into 11595/11606 zone)
- 11637 (Extension in Daily range)