In Asia today, Chinese Retail sales, Investment and Industrial production came in below forecast. There were some advancements in share prices across Asia & Europe as a result of the poor data, with investors seeing this as a road to more monetary easing from the PBOC, just days after cutting interest rates – see full article here.
The effects of the European Central Bank’s QE program seem to be trickling down into the economies across Europe. Some firm data from France, Spain and stronger data from Italy with it’s GDP rising 0.5% YoY. However, this was dampened by weaker German data, as its GDP grew only 0.3% vs 0.7% in the prior quarter. Nonetheless, the overall Eurozone economy seems to be picking up, albeit a bit slower than anticipated with data below expectations. GDP in the Eurozone has grown 0.4% vs 0.3% in the previous quarter but came in below forecasts of 0.5% growth – but bear in mind, this is the strongest growth since Q2 2013 – see full article here.
So what does all this mean for the DAX? The collective data from the Eurozone this morning initially looks mixed, not to mention the ongoing issues with Greek repayments to the IMF. The Eurozone GDP coming in below forecast was primarily as a result of German growth slowing by more than expected as foreign trade weighed on Europe’s largest economy. Will this sentiment transfer across into the DAX today?
Looking at an Hourly chart of the DAX below, one can see price finally met support at around the 11380 level in trading yesterday. This level, mentioned in yesterday’s article as a level to lean against for bulls, was the 61.8% retracement in price from last week’s low of 11163 to the highs of 11731 on Friday. The price frequently met resistance on any rallies into the 11467/11457 and Hourly 100 & 200 MA’a (blue & green lines in chart below), but finally reclaimed the Hourly 200 MA late yesterday.
(click to enlarge)
CONCLUSION – NEUTRAL
Price has bounced around the 61.8% Fib level of last week’s move up, and against the 61.8% Fib level of this week’s move down. The sentiment present in the market today is somewhat subdued and confused as economic data is not quite as good as expected, yet not that bad either. Price has only travelled 126 pips today versus the average over the last 22 trading days of 260 pips, so there is plenty of room to roam.
For bulls, the line in the sand today is the 11467/11457 zone. Price has tested this area earlier on and held against it. Areas to define risk against are the Hourly 100 & 200 MA’s. Value investors will continue to buy at 11467, 11328 and 11193. For risk averse investors, price needs to clear above the 11606 zone.
For bears, the line in the sand today is the 11606/11595 zone. Price came up to this area earlier but could not pierce through. Shorting opportunities reside on rallies into 11600, a break below the Hourly 200 MA but ideally price needs to close below 11457.
Bearish targets :-
- 11467 (Daily low & key zone)
- 11377 (Yesterday’s low)
- 11333 (Extension of Daily range & into 11328 key zone)
Bullish targets :-
- 11636 (Daily R1 Pivot)
- 11727 (Extension of Daily range & near weekly high of 11731)
- 11776 (Daily R2 Pivot & into 11751 key zone)