Despite opening higher this morning, the DAX reversed, plummeting from the lofty highs of 11925 to the depths of 11677 – 248 pips in just over half an hour. To put that into some sort of perspective, the average Daily range for the DAX over the last 22 days is 252 pips.
The reason for this almost catastrophic drop in equity prices was over comments on a Greece default. Klaus Regling, who is the managing director of the European Stability Mechanism said that without an agreement Greece will not be receiving any more money, on top of the €130 Billion it has received so far. – read full article here
Time will tell as to the future of the Greek membership within the Euro as Finance Minister Yanis Varoufakis remains a stalwart to the national public sentiment. Over the weekend he talked of how Greece ‘should not adopt any further austerity measures’ – read full article here
Looking at an hourly chart of the DAX below, one can see the drop off in this morning’s session was met with firm support at the Hourly 200 moving average (green line in the chart below).
(click to enlarge)
CONCLUSION – BULLISH
As price is still above it’s Hourly 200 MA and the fact price has failed to break below that level on the two hours that followed looks promising. The Daily S3 Pivot is at 11701, not to say price can’t move further of course, but it really is extended at those low levels. However, with U.S. markets opening at 14:30pm, investor sentiment may wish to exit positions in European Equities until a clearer picture has developed over the future financial stabilty of Greece – which would result in a further drawdown in price.
For bulls, price needs to get back above the 11776 zone which it has failed to do since collapsing through that zone this morning. Levels to lean against for bulls wishing to define risk are the Hourly 200 MA, 11776/11751 zone, Hourly 100 MA (blue line in the chart above). For risk averse traders, price ideally needs to clear the 11858/11842 zone.
For bears, shorting opportunities reside into the 11776/11751 zone, the Hourly 100 MA or on a break of the Hourly 200 MA for the risk averse
Bearish targets :-
- 11677 (Daily low)
- 11622
- 11606 (Key zone)
Bullish targets :-
- Hourly 100 MA
- 11858/11842 zone
- 11925 (Daily High)