The DAX has plummeted in trading today, a continuation of it’s downward slide yesterday. All eyes were on the ECB press conference and for anymore details on their QE program. Draghi described speculation that the €60 Billion a month scheme would be scaled back as “surprising” and that there would be determination for quantitative easing to continue until the agreed date of September 2016, or until inflation was back up to the ECB’s target of close to 2%. Instead of markets rallying off this news, the DAX started to selloff after news over Greece leaked from Financial Times reported Thursday.
Greek officials quietly approached the IMF, asking for loan repayments deadlines to be delayed – but the request was denied. Poul Thomsen, the IMF’s Europe director told his executive board that negotiations were “not working” and he could not envisage a successful conclusion to the country’s current bailout. The Greek government faces another €200m payment on May 1 and another for €745m 11 days later. A few days ago a Greek official was quoted in the Financial Times saying: “We have come to the end of the road . . . If the Europeans won’t release bail-out cash, there is no alternative [to a default].”
Greece’s finance minister Yanis Varoufakis is due to meet President Barack Obama today. Now reaching out to the highest levels of international diplomacy to secure its future in the eurozone. Mr Obama has previously indicated his support for the Leftist government, calling for a fast and equitable solution to the country’s debt crisis. Markets will be closely watching for anymore developments on the Greek situation over the coming days.
Looking at the Hourly chart, the DAX price has broken through the ‘line in the sand’ level for the bulls in trading today at 12171. It has tumbled from a high of 12245 down to a low of 12013. Will there be a slowdown in momentum for any possible continuation to the downside today? This is the next question traders should be asking. Today’s 232 pip move is beyond the average range for the last 22 days – 192 pips. The Daily S3 Pivot level at 12039 has also been breached. The 12014 is the 50% retracement move from 26th March – 13th April. The 12022 is a key line which price has found as both support and resistance over the last month.
(click to enlarge)
CONCLUSION – BEARISH
For as long as price stays below the Hourly 200 moving average (green line in the chart above), the bias remains to the downside. However, as aforementioned, how much further the market can move today is questionable.
For bulls, the overall long-term trend is still up and will be looking for buying value. They can define their risk at these low levels 12039 – 12014. But for the bias to turn bullish once more, price needs to move not only above the Hourly 200 MA, but also above the 100&200 MA’s on the 5 minute timeframe (blue&green line in chart below), the downwards trendline and finally the 12225 zone.
For bears, shorting opportunities reside on pullbacks into the 100&200 MA on the 5 min TF, the Hourly 200 MA and 12190/12225 zone. The line in the sand will be today’s high of 12244.
(click to enlarge)
Bearish targets :-
- 12014 (50% retracement mentioned above)
- 11975 (previous key line – see Hourly chart)
- 11922 (61.8% retracement – see Hourly chart)
Bullish targets :-
- 12175 (Hourly 200 MA &close to Daily S1 Pivot at 12169)
- 12225 (Upper end of key zone marked in yellow – see Hourly chart)
- 12248 (Daily Pivot point and close to daily high of 12244)