The DAX opened in positive territory when European bourses opened at 07:00 GMT after news of a phone conversation between Greek Prime Minister Alexis Tsipras and German Chancellor Angela Merkel on Sunday. According to a source close to the matter “they expressed their common will for a steady communication throughout the course of negotiations in order to have a mutually beneficial solution soon ” – see full article here .
However, the DAX plummeted 180 pips in just half an hour off the back off the Deutsche Bank news. Germany’s biggest bank reported that its first quarter net profits fell to €559 Million vs €1.08 Billion last year. The bank was fined $2.5 Billion after being charged with Interest Rate manipulation. Today it announced an overhaul of its banking operations by cutting €200 Billion in investment bank assets and exiting a tenth of the countries in which it operates as part of it’s restructuring plan. The stock fell 4.9% when London opened, with the DAX following suit – see full article here
We have a number of macroeconomic events on the horizon as we round off April and head into May, including Interest Rate Decisions from the Bank of Japan and the US Federal Reserve. Eurozone Unemployment Rate on Thursday, Friday is a national holiday in both China and mainland Europe, but over in the US two different sets of Manufacturing PMI data are due. These will have some impact on the DAX with other focus being on more GfK data tomorrow at 07:00 GMT, German CPI on Wednesday at 13:00 GMT, on Thursday we have German Retail Sales at 07:00 GMT and German Unemployment Rate at 08:55 GMT.
Looking at the Hourly chart of the DAX below, you will notice the yellow area marked 11751/11776. This zone acted as a magnet in last weeks trading with price coming back to this area several times either on move higher or on an attempt lower. Price found a floor at 11671 which was the open on the Sunday prior. This level will be one to watch for the week ahead if the DAX moves lower.
(click to enlarge)
CONCLUSION – NEUTRAL
The market is still below the Hourly 100 & 200 moving averages (blue & green line in chart above) and a downwards trendline which has been in place since the 10th April. This should all point towards a bearish bias – however – it may look like the DAX is on the verge of moving back to the upside. After breaking the 11775 zone last week, price failed to hold under this area and move lower.
For bulls, buying opportunities reside on a break of 11860, the highs for the day 11906 or buying dips into 11775 zone with stops just below the 11750 area. For the more risk averse, wait for price to clear the Hourly 200 MA for a few bars.
For bears, shorting opportunities reside into the Hourly 100 & 200 MA’s, 11900 or on a break below 11750.
Bearish targets :-
- 11798 (Daily Pivot Point & close to psychological area of 11800)
- 11728 (Today’s low & close to Daily S1 Pivot 11713)
- 11703 (Extension of Daily range – 203 pips avg. last 22 days)
Bullish targets :-
- 11906 (Today’s high & close to 11900)
- 11931 (Extension of Daily range & into Hourly 200 MA & 11928 [38.2% retracement from 10/4/15])
- 11975 (Daily R2 Pivot)