Markets are slowly digesting the U.S. Federal Reserve’s FOMC minutes from their March meeting, released yesterday. Yet again, more convoluted messages on a timeline for an Interest Rate hike. Some of the panel seeing a hike as soon as June, others thought a rate hike wouldn’t be warranted until later in the year or 2016 as low oil prices and the strong dollar would likely hold inflation down :-
“Several participants judged that the economic data and outlook were likely to warrant beginning normalization at the June meeting. However, others anticipated that the effects of energy price declines and the dollar’s appreciation would continue to weigh on inflation in the near term, suggesting that conditions likely would not be appropriate to begin raising rates until later in the year, and a couple of participants suggested that the economic outlook likely would not call for liftoff until 2016.”
Bear in mind, two weeks after the Fed’s meeting – the disappointing March jobs report came. It was the worst month of job gains since the end of 2013. Add on dollar pressure and weak consumer spending, and it now appears a Fed rate hike is likely on hold until at least September.
So where now for the DAX? From German data released this morning, imports and exports both grew faster than expected in February and German industrial production rose 0.2%. This shows the fundamental upward trend in German industry is still intact. Looking at the Hourly chart below, one can see it has hardly been an enthralling start to the trading day – as the DAX has been in a 70 pip range. Although, the Bank of England Interest Rate decision at 12pm GMT may fuel some movement in the Index.
(click to enlarge)
CONCLUSION – BULLISH
I am still somewhat wary of the gap that looms below at 12006 which is yet to be filled. The DAX didn’t exactly sell-off after the FOMC minutes, but it hasn’t marched higher either.
For bulls, safety of entry lies at the 12000 area, whereby the gap from Tuesday would be filled and comes in close to the Hourly 100 & 200 moving averages (blue & green lines in the chart above).
For bears, shorting opportunities reside against the high from Tuesday at 12148 or a close below the Hourly 200 MA, which also coincides with a break of an upwards trendline which has been in place from three weeks ago. (see chart above)
Bearish targets :-
- 12006 (Gap fill & close to Hourly 200 MA/ upwards trendline)
- 11906 (Daily S3 Pivot)
- 11858 (low from Monday and top of 11850 zone)
Bullish targets :-
- 12148 (Tuesday’s high)
- 12222 (All time highs)
- 12254 (Extension of daily range – close to Daily R3 Pivot of 11246)