The future of Greece’s involvement within the EU and the Euro is still undecided. Greek Prime Minister Alexis Tsipras spoke in the European Parliament earlier this morning, stating that the intention of Greece is to remain within the Eurozone and will submit a list of reforms within 48 hours. The deadline set, as stated by the European Council President Donald Tusk, is by the end of the week.
Greece is currently on the brink of bankruptcy and desperately needs more cash to keep the banks afloat. The country will make an application for a loan from the European Stability Mechanism today. The application would first need to be approved and signed off by members of the ECB, IMF and European Commision, with ministers from the Eurozone convening on Sunday to agree on a financial aid plan going forward – see full article here
Looking at an Hourly chart of the DAX below, you will notice I have added a Green horizontal line to the chart, currently at 10665. This line represents the 200 day moving average, an important level of note to traders about a market’s overall trending bias. The DAX has been in a bull market since October 2014, spending only one day below its 200 day MA. Yesterday, the market came down to test this area, but could not close below it by the day’s close. Again today, price has tested this area on a couple of occasions and bounced higher. Long term investors have seized their opportunity in buying at these suppressed prices of good value, as risk can be easily defined and more importantly, limited.
(click to enlarge)
CONCLUSION – BULLISH
From a fundamental perspective, Greece has officially applied for another loan, will submit reforms and has been given a five day deadline, so markets will now have to wait – but the potential positive outcome has commenced. From a technical perspective, price is still above its 200 day MA, so my bias remains – Bullish above and Bearish below.
If price manages to pierce this level, the ultimate line in the sand for Bulls is the 10616/10592 zone. This area was retested a few days after the ECB announced it’s massive QE program back in late-January but managed to hold. If it fails to hold this time, we will be entering into a Bear Market.
For Bulls, price now needs to get above the 10892/10856 zone. The next target after that will be the Hourly 100 MA (Blue line in the chart above). For risk averse traders, price needs to clear the Hourly 200 MA, which currently resides just above the next all important 11018/10986 zone.
For Bears, shorting opportunities reside on rallies into the 10892/10856 zone and Hourly 100 MA. For risk averse traders, price needs to break and close below the lows of the day currently at 10652.
Bearish targets :-
- Daily 200 MA
- 10652 (Daily low)
- 10543 (Daily S2 Pivot)
Bullish targets :-
- 10856 (Key zone)
- 10892 (Key zone)
- Hourly 100 MA