A sense of renewed, positive vitality has returned to the DAX and other European Equity markets, as news out this morning showed the Greek Government have voted in favour of a third bailout package which would amount to €86 Billion. After a gruelling all-night session in the house, Greek MP’s voted 222 in favour of another bailout in the 300 seat Parliament – see full article here
Data released out of Germany this morning showed growth in its GDP for Q2 2015. The figure came in at 0.4%, which even though is below economist forecasts of 0.5%, still shows improvement on last Quarter of 0.3% and a big increase from Q2 last year, at 1.6% vs 1.1% respectively. This was predominantly down to stronger exports as a result of the weaker Euro caused by the European Central Bank’s intervention through it’s €1.1 Trillion bond-buying program which launched earlier in the year – see full article here
However, a degree of uncertainty still looms globally over more potential surprises from China devaluing its currency further or whether the Fed is still on track to begin raising rates in the U.S. next month. Consensus certainly leans towards a rate hike, as a data-dependent Fed had another positive number yesterday showing a rise in Retail Sales 0.6% vs 0.0% in the previous month.
Looking at the Hourly chart of the DAX below, one can see price surged higher in trading yesterday during the European session, only to fall back to Asian session lows once more, as investors and traders parked profits during the U.S. session off the back of strong U.S. data. However, price failed to close below my ‘line in the sand’ level from yesterday’s article of 10984, with a brief touch of 10977 before moving higher once more. Price then consolidated around this level, meandering sideways during today’s Asian session, then surged back to the upside at the European open. This gives traders clues as to where risk can be defined for Bulls today, Bullish above 10977 and Bearish below.
(click to enlarge)
CONCLUSION – BULLISH
This bias remains in place until price moves and closes below the 11018/10987 zone, with a break of 10977.
For Bulls, the line in the sand today will be 10977. Risk can be defined into the 11018/10987 zone and against the 10977 level. If price manages to continue its climb higher today, Bulls will face strong resistance from 11150 onwards as there is yesterday’s high to contend with at 11157, the 11194/11174 zone and the Hourly 100 moving average (blue line in the chart above). The 11176 level is also the extension of the Daily range when compared to the average for the last 22 trading days of 198 pips. Risk averse traders will be seeking to enter the marketplace once the Hourly 200 MA (green line in the chart above) is reclaimed.
For Bears, short entry points where risk can be defined are into the same resistance levels of note for Bulls – namely 11157, 11176 and the Hourly 100 MA. The more risk averse will be entering into positions on a break of 10977.
Bearish targets :-
- 10977
- 10895 (Extension of Daily range + 10892 weekly low)
- 10870 (Daily S2 Pivot)
Bullish targets :-
- 11176 (Extension of the Daily range)
- Hourly 100 MA
- 11297 (Daily R3 Pivot)