Last week in Asia we saw a slowdown in Chinese Exports, followed by a subsequent devaluation of the Yuan from the world’s second biggest economy. This shook the nerve of investors which saw some equity markets collapse almost 5%. From Japan today, data released showed that the economy shrank 1.6% for the same Q2 period last year and a 0.4% decline compared to Q1 2015 – see full article here
Looking at the Hourly chart of the DAX below, what looked like a base forming at the 11000 area on Friday, was soon negated later in the session, for markets to turn around once more, edge higher, almost reclaiming all the lost ground from earlier in the session. In today’s session the market gapped down after digesting the data from Japan, filled the gap and rolled back over.
(click to enlarge)
CONCLUSION – BEARISH
The market has still failed to take out the Hourly 100 MA (blue line in the chart above) and has recently taken out the trendline in place from Friday and subsequently the 11018/10987 zone. Watch closely where price finishes on the day also – will price close below the Daily 200 MA for the first time since ECB announced QE back in January this year?
For Bulls, price needs to get above 11084 as the DAX has posted a series of lower lows since the start of last week. This area comes in close to the Hourly 100 MA. Above that the next level of resistance to clear lies at the 11194/11174 zone. Risk averse traders will be entering the market on the Hourly 200 MA (green line in the chart above) being cleared, currently just above the 11328/11318 zone.
For Bears, the line in the sand today will be 11084. Short entry positions where risk can easily be defined are at last weeks low of 10892, 10987 (bottom end of key zone), 11006 (trendline break), 11018 (top end of key zone) or into the 100 MA on the 5 minute timeframe or on a break of 10815.
Bearish targets :-
- 10815 (Daily low)
- 10800
- 10755 (Daily S3 Pivot)
Bullish targets :-
- 10987 (Key zone)
- 11084 (Daily high)
- Hourly 100 MA