Chinese stocks have continued to tumble in trading today, where the Shanghai Composite lost another 7.6%. Investors in China are running for the exits after yesterday which has been dubbed the Chinese ‘Black Monday where the stocks fell 8.5%. It was the worst fall since 2007, as investors globally become ever more anxious about the current state of economic affairs from the world’s second largest economy and what impact this will have on demand for European and American products – see article here
The Japanese Nikkei also retreated by 4% during the volatile Asian session, however since the European open, equity markets have started to rally, with the FTSE, DAX and CAC all up over 2% on the day.
Looking at the Hourly chart of the DAX below, one can see price dropped below the lows of the year at 9378 to 9320 before Bulls aggressively stepped into the market and drove the price back up. A large hammer was formed on the Hourly chart with price closing way above 9378 at 9527 – a level to watch in the coming days.
(click to enlarge)
CONCLUSION – BULLISH
This bias will remain in place until 9676 is taken out.
For Bulls, areas where risk can be defined and therefore limited, is into the 9848/9831 zone and into the 100 & 200 moving averages on the 5 minute chart. The line in the sand today will be 9676. However the upside maybe limited as resistance lies up ahead at 9991 (yesterday’s high) and 10054.
For Bears, areas where risk can be defined is into the intraday highs of 9900, a break below 9831, a close below the 5 minute 200 moving average and 9676 for the risk averse.
Bearish targets :-
- 9676
- 9527
- 9378 (January low)
Bullish targets :-
- 9991 (Yesterday’s high)
- 10054 (Friday support,now resistance)
- Hourly 100 MA