The DAX continued it’s slow slide lower in trading yesterday, with further negative news looming in the background. A report released further heightened woes about a possible Greek default after talk the government has decided to withhold €2.5 billion of payments due to the IMF in May and June if no agreement is struck.
Looking at the Hourly chart below, one can see price found support at 12275 in yesterday’s trading session, a level eyed as a buying opportunity in yesterday’s article and drifted back to the upside. In trading this morning it hit a high 12345, before rolling over once more. It has failed to hold against the 12300 level, and just recently cracked through yesterday’s lows off the back of U.K. data. CPI figures released this morning, showed the annual rate of inflation in the U.K. has remained steady at 0% for the second consecutive month – remaining at its lowest level since 1989.
(click to enlarge)
CONCLUSION – NEUTRAL
The market is moving lower at present, but I am dubious as to how far the move will go. There are strong barrier’s of support below, with the Hourly 100 moving average (blue line in chart above) at 12226 and the zone of 12225 – 12190 (marked in yellow in chart above). The 12190 level will be the line in the sand for the bulls today, and the 100+200 MA’s on the 5 minute chart being the line in the sand for the bears.
Be wary also that later today at 13:30 GMT, the U.S. Retail Sales data release will show whether the pace of spending is picking up after a sluggish start to the year.
For bulls, buying opportunities reside into strong support. At the previously mentioned Hourly 100 MA and 12225/12190 zone. Above that, look for more buyers to step in with confidence if price manages to break above the 100+200 MA’s (blue & green line on chart below) on the 5 minute chart.
For bears, shorting opportunities with defined risk reside at rallys into the 100 and 200 MA’s on the 5 minute chart.
(click to enlarge)
Bearish targets :-
- 12190 (Bottom end of bull support zone & near Daily S2 Pivot of 12193)
- 12145 (Extension of daily range – 22 average is 210 pips)
- 12110 (Daily S3 Pivot)
Bullish targets :-
- 12407 (All time high)
- 12435 (Extension of daily range)
- 12461 (Daily R2 Pivot)