A new day, a new month and a new quarter – what a start it has been! Yesterday’s drop off in the DAX and other global indices for quarter-end book balancing was further exacerbated by the fall in the Nikkei in today’s Asian session. The Japanese index broke below the psychological 19,000 level following a disappointing BoJ Tankan survey.
The DAX plummeted through the Hourly 100 moving average (blue line in chart below), 11850 zone, downwards trendline and through 11800. However it met resistance coming into the 11775/11750 zone and also failed to close below the 11800 level – twice. This coupled with positive Chinese manufacturing data – bulls took their opportunity and have not looked back. Price quickly reclaimed the 11850 zone, the Hourly 100 & 200 MA’s, the 12000 level and as I type has even pierced the 12100 price point.
One thing is for sure DO NOT FIGHT THE CENTRAL BANKS. The ECB is printing €60 Billion per month. Only seasoned traders should dare take short positions intraday, like yesterday. Buying at the 11950, taking profit at the 5 minute 100 MA, riding back down to target of 11930. All possible from my levels in yesterday’s article (http://theshielreport.com/dax-intraday-levels-31st-march/), but for risk averse traders… certainly not advisable. It is much wiser to take long positions at key points that have defined risk e.g. Hourly 100 & 200 moving averages,11850, 18000 and being stopped out for a small loss. Then, when price moves back above these levels, 11800, 11850 – to re-buy with small stops.
After failing to hold below the 11800 level price surged back to the upside. The move up was further fuelled in the London session when positive data came out of Europe. Italian, French, German and the Eurozone manufacturing results all came in higher than expected. Looking at the hourly chart below, one can see the resistance that lies ahead. The 12100 proved to be stubborn resistance for bulls over the last two days, with price topping out at 12122.
(click to enlarge)
CONCLUSION – BULLISH
The main brunt of the move is in for the day I’d say as the index has travelled an astonishing 333 pips so far. Much higher than 219 pips, which is the average over the last 22 trading days.
For bulls, pullbacks into key levels & the Fib zones (at present,move up as appropriate) would be a sensible strategy. Those being 12000, 11986, 11947, Hourly 200 MA, 5 minute 100 & 200 MA’s (see chart below) and 11900. Buying breakouts at these elevated levels carries far more risk as resistance lies ahead at yesterday’s high of 12122, unless you already have open positions in which case you are buying into strength.
For bears, shorting levels are at 12122, 12200 or a close back below the Hourly 200 MA for several bars.
(click to enlarge)
Bearish targets :-
- 11989 (Daily Pivot)
- 11932 (Hourly 200 MA)
- 11856 (Daily S1 Pivot & into 11850 zone)
Bullish targets :-
- 12122 (Yesterday’s high)
- 12198 (Daily R2 Pivot & also into 12220 zone – see Hourly chart)
- 12222 (All time high)