Pessimism lingers in the air as woes over the future of Greece continue to dominate sentiment in European equity markets. Today is the second day of a two-day European Union summit in the Latvian capital, Riga. Merkel’s discussions in Latvia with Tsipras and French President Francois Hollande broke up in the early hours of Friday with an agreement only to keep talking. Tsipras talked of a resolution “soon,” whereas Merkel said there’s “a whole lot to do.” – read full article here
GDP growth data out of Germany showed a contraction to 0.3% in Q1 2015 from 0.7% in the previous Quarter, with the DAX moving lower off this news. Today’s GDP data, yesterday’s PMIs and also the Business Ifo drop of 108.5 vs 108.6 previous, could start to foster new concerns over the strength of Germany’s economy. – read full article here
Today ECB president Mario Draghi speaks at a economic forum in Sintra, Portugal. It is the second of it’s kind for the ECB which is similar in nature to the U.S. Fed’s Jackson Hole, Wyoming annual meeting. In this morning’s session, Draghi stated that the future prospects of the Eurozone is starting to strengthen again stating, “The economic outlook for the euro area is brighter today than it has been for seven long years.” Also drawing hints at Greece and other member governments to play their part “But what the cyclical recovery does achieve is to provide near perfect conditions for governments to engage more systematically in the structural reforms that will anchor the return to growth.” – read full article here
Looking at the Hourly chart of the DAX below, one can see price continued to meander sideways yesterday as investors continue to take profits and digest the overall sentiment present in Europe. The DAX managed to hold against the 11776/11751 zone but again failed to move above the 11858/11842 zone with any conviction. It is dropping in this morning’s trade after worse than expected data from Germany. The Hourly 100 moving average (blue line in the chart below) and 11776/11751 zone come into focus once again.
(click to enlarge)
CONCLUSION – NEUTRAL
The bias would vere on the side of Bullishness as price remains above it’s Hourly 200 MA and is holding against the 11776/11751 zone quite comfortably at present. However, the ECB meeting in Portugal may deliever some unwelcome news, so be prepared – and define your risk.
For bulls, risk remains the same as yesterday, leaning against the Hourly 100 MA and 11776/11751 zone. Below that risk can be defined at the Hourly 200 MA & 11606/11595 zone. Risk averse traders will be buying on a break of the 11858 zone.
For bears, shorting opportunities lay on a break of the Hourly 100 MA & 11751 level or into the 11858/11842 zone. Risk averse traders will be shorting on a break of 11595.
Bearish targets :-
- 11751 (Key zone)
- Hourly 200 MA
- 11627 (Extension of Daily range – 22 day avg. 258 pips)
Bullish targets :-
- 11890 (Yesterday’s high)
- 11976 (Daily R2 Pivot)
- 12054 (Extension of Daily range) & close to Daily R3 Pivot 12061