The DAX dropped in trading this morning as traders remain wary over Greece. The Greek Prime Minister Alexis Tsipras and German Chancellor Angela Merkel are due to meet today in Berlin, with the meeting to be followed by a press conference at about 5pm GMT. Merkel is keen to hear from him in person about his reform plans which he promised the European Union leaders at a summit last week, with the aim of unlocking more bailout cash for Greece.
Investors have become increasingly more nervous towards Greece’s financial situation as it has to pay €1.5 billion in pensions and salaries by the end of this week amid signs that it could run out of money by early next month. Also net withdrawals on Friday alone were about €450 million , on top of €1.1 billion which had fled Greek banks in the previous three days.
The DAX recovered some of its 200 pip loss in trading this morning, after positive comments from the German Central Bank or Bundesbank –
“The German economy, following surprisingly strong growth at the end of 2014, should have continued to grow strongly in the first quarter of 2015. For the second quarter, too, the robust economic uptrend will continue. The main driving forces are foreign demand, private consumption and, to a lesser extent, residential construction”
Looking at the Hourly chart below, it’s easy to see the loss of confidence towards Greece’s current financial uncertainty transfer across into European equities. The DAX found resistance in late trading Friday against the upper trendline connecting the highs set earlier in the week. After consolidating in Asian trading on Monday, the DAX once again broke through it’s Hourly 100 moving average (blue line in the chart below). It subsequently plummeted through its 200 MA the following hour, eventually finding support at the the key 11850 area. This zone from 11858-11842, has been a strong support for the DAX since the 11th March. Price did retrace off positive comments from the Bundesbank, but failed to close and move above its 200 MA.
(click to enlarge)
CONCLUSION – BEARISH
This is only from an Intraday viewpoint. The DAX is still bullish when looking at either the Daily or 4 Hourly charts. However, price has closed and stayed below the Hourly 200 MA in this morning’s session – the first time in six weeks.
Bears, need to ensure price stays below the Hourly 200MA and the 11850 zone is the next resistance zone to break (see chart above). But, I am somewhat sceptical about how much further to the down side price will move today as it has already travelled 205 pips vs the 22 day average of 183.
Bulls, price to needs to move back above the Hourly 200 & 100 MA. This price is currently at 11961. Looking at the 5 minute chart below, this price corresponds with the 61.8% Fib move down today at 11969. This is the line in the sand level for the bears today.
(click to enlarge)
Bearish targets :-
- 11800 (also near Daily S2 Pivot of 11798)
- 11784 (Last week’s lows)
- 11741 (The low from 13th March)
Bullish targets :-
- 12087 (Friday’s high)
- 12116 (Daily R1 Pivot)
- 12200 (also near Daily R2 Pivot 12203)