The DAX continued to languish yesterday after weaker than expected German GDP data sent the Index lower earlier on in the trading session. Concerns over weak exports being the reason for this was further exacerbated later in the day from data out of the U.S. Retail sales for April had 0% growth versus 1.1% the prior month. This only fueled further selloff in European equities, with the DAX tumbling a further 250 pips.
Look for any comments later today from ECB president Mario Draghi as he delivers a speech to the IMF in Washington about Greece. Earlier on, finance minister Yanis Varoufakis said Greece’s debt was not viable and repayments to the European Central Bank should be pushed back, seeking to delay payment of around €27 Billion – read full article here.
Looking at the Hourly chart of the DAX below, once can see price once again met resistance at the 11328/11316 zone in trading yesterday. Bulls and bears were at loggerheads as the DAX remained in a tight range towards the end of the session. The 11300 level was penetrated this morning with what looked like a sharp selloff, however, buyers stepped in at the 11213 level. This low from last Thursday was tested on three occasions, with price failing to close below this area.
(click to enlarge)
CONCLUSION – BEARISH
The DAX has undoubtedly rallied this morning, but price is back below its Hourly 200 moving average (green line in chart above). Worries still loom over the future of Greece as the negotiating debacle of debt repayments continues.
For bulls, price has major resistance up ahead with the 11467/11457 which is very close to the Hourly 200 MA (currently 11478). Above that is the Hourly 100 MA (blue line). Price has moved 220 pips versus its average 270 pips over the last 22 days, which would bring price upto 11484 on an extension of the daily range. Levels to lean against to define risk would be the 11328/11300 area or on a pullback into the 100 MA on the 5min chart. For risk averse traders, price needs to clear above the Hourly 100 MA.
For bears, levels to lean against with reduced risk are the 11467/11457 zone and the Hourly 100 & 200 MA’s. Alternatively on a break of 11316.
Bearish targets :-
- 11328 (Top end of key zone)
- 11213 (Daily low & close to Daily S1 Pivot of 11217)
- 11163 (Low from last week & exact extension of Daily range)
Bullish targets :-
- 11457 (Bottom end of key zone)
- 11484 (Extension of Daily range & close to Hourly 200 MA)
- 11519 (Daily R1 Pivot & close to Hourly 100 MA)