European equities have taken a hammering in trading today, as investors continue to pile on their short positions. Over the weekend Greece failed to reach an agreement with it’s creditors by the arranged Sunday-deadline. Greek Prime Minister Alexis Tsipras commented
“If we have not reached an agreement with our partners, it’s not because of our intransigence or incomprehensible positions from the Greek side. It is rather because of the obsession of some institutional representatives who insist on unreasonable solutions and are being indifferent to the democratic result of recent Greek elections.”
Markets have sold off sharply since – see full article here
Data out of Germany and the Eurozone today has resulted in further drop offs in equities. The DAX has fallen from the highs 11508 to the lows of 11342, after figures showed weaker than expected PMI figures. German Manufacturing PMI came in at 51.1 versus expectations of 51.4 and Eurozone Manufacturing PMI came in at 52.2 versus expectations of 52.3 – see full article here
So where next for the DAX? Looking at the Daily chart of the DAX below, one can see price is still holding above it’s 100 day moving average (blue line in the chart below). If the DAX closes on the day below this line, currently at 11424, this would present a longer term bearish picture for the DAX. The 11316 level is also key, this is the 50% retracement from the lows in late Jan when the ECB announced their colossal QE program to the highs back in April.
(click to enlarge)
CONCLUSION – BEARISH
As long as price remains below the Hourly 200 MA, then the bears are in control. Price has sold off 291 pips in trading today versus its 22 day average of 238 pips, but that doesn’t mean there isn’t room to roam further. Investors are jittery over Greek woes at the moment and will continue to short the DAX on anything negative! Look out for German CPI data released at 1pm GMT.
For bulls, price needs to get back above the 11467 zone and ideally take out the highs today of 11508. The next resistance for bulls after that would be 11565, 11578 and the 11606/11595 zone.
For bears, shorting opportunities reside into the 100 & 200 MA’s on the 5 minute timeframe (see chart below), also into the 11467/11457 zone. For risk averse traders, risk can be defined on a break of the day’s lows at 11342, but downside could be limited as the 11328/11316 zone looms just below.
(click to enlarge)
Bearish targets :-
- 11328/11316 zone
- 11321 (Daily S1 Pivot)
- 11201 (Daily S2 Pivot)
Bullish targets :-
- 11508 (Daily High)
- 11517 (Daily Pivot)
- 11606/11595 zone