Global equity markets are slightly subdued in trading today with mixed sentiment amongst investors. From Asia, the HSBC manufacturing PMI had its 3rd consecutive month of contraction at 49.1 vs. exp. 49.3. This fueled more notions from investors as they anticipate more accommodative monetary policies from the PBOC to help boost the economy as Chinese equities rose 1.1%. – read article here
As mentioned in yesterday’s article, comments from ECB’s Cœuré on Monday evening & Noyer on Tuesday pointed towards an acceleration of QE in the coming months to counteract any volume lulls. Investors took some profits off the table in trading yesterday as the DAX meandered sideways ahead of the U.S. F.O.M.C. minutes. The report, released yesterday at 19:00 GMT contained no major surprises. A rate hike in June is off the table due to turbulent data over the last few months. Markets moved higher initially off this news, with the DAX looking to penetrate the 11842/11858. But alas, the rally was short lived as it followed the S&P’s slide lower with expectations of a September rate hike still present in the market place. – read article here
The DAX has continued to edge lower in trading today as data from Germany showed a contraction in May with it’s Manufacturing PMI number coming in at 51.4 vs exp. of 52.3, however the move lower was capped by a slightly higher reading from the Eurozone PMI coming in at 52.3 vs exp. of 52. – read article here
So looking at an Hourly chart of the DAX below, one can see the selloff in this morning’s activity was once again stopped from piercing the 11751 level.
(click to enlarge)
CONCLUSION – BULLISH
It will be bearish below the 11751 level and bullish above the 11858 level with consolation and profit taking in between for today’s session. However, the ultimate line in the sand for the bulls today will be the 11595 level just below the Hourly 200 moving average (green line in the chart above). This would be when my bias would turn bearish on the DAX. Look for volatility around 12:30 GMT with ECB releasing monetary policy notes and then later with ECB president Mario Draghi speaking at 18:30 GMT.
For risk averse bulls, price needs move higher and close above the 11858 level. Alternatively value investors can buy with defined risk against the 11751 level, Hourly 100 MA (blue line in chart above) and the 11606 zone.
For bears, shorting into the 11858/11842 zone or on a break of the 11751 level are easy to define risk areas. But be aware, as the downside move could be limited with rising 100 & 200 MA’s looming below.
Bearish targets :-
- Hourly 100 MA
- Hourly 200 MA
- 11579 (Extension of Daily range – 22 day avg. is 263 pips)
Bullish targets :-
- 11858 (Key zone)
- 11938 (Daily R2 Pivot)
- 12018 (Extension of Daily range)