The DAX along with other European equity markets rallied yesterday off the back of news from Greece. Prime Minister Alexis Tsipras has attempted to breath new life into its stalling talks with its creditors by reshuffling its negotiating team. This helped ease tensions in the markets, as signs of repaying debts to the IMF looked more promising. Greece’s alternate foreign minister, Euclid Tsakalotos, will head a new policy negotiating team, a senior government official said, while the finance ministry’s chief economist will lead talks in Brussels with the heads of the country’s international creditors — a formation known as the Brussels Group – see full article here.
Looking at an Hourly chart of the DAX below, one can see the huge surge in price yesterday. Price held against the key 11750 zone, broke through the 11860 zone, the Hourly 100 moving average (blue line), Hourly 200 MA (green line) and the downwards trendline in place since the 10th April. The DAX has sold off in trading today and currently resides around the Hourly 100 MA.
(click to enlarge)
CONCLUSION – BULLISH
The market is down today, and currently back below it’s Hourly 200 MA. There is no doubt that anxious sentiment is still lingering in the markets as investors wait for news out of Europe and the U.S. So the DAX may be stuck in somewhat of trading range now until further news is released. Tomorrow is the minutes of the F.O.M.C. showing whether there is any more talk of a timeline on U.S. Interest Rates rising. From the eurozone, the weekly ECB meeting will commence on Wednesday, to discuss whether Greek banks will receive any further liquidity assistance through its ELA program.
For the long term bulls, price at these suppressed levels is very attractive (11872 as I type). Risk can be defined against the Hourly 100 MA and into the 11840/11860 zone. The average Daily range for the DAX over the last 22 trading days is 212 pips. Today the Index has moved 199 pips. An extension in this range brings price to 11839, the lower end of the 11860 zone. An easy level to define risk against. For the more risk averse, buying on a break back above the Hourly 200 MA would be more fitting.
For bears, price to needs to close and hold below the Hourly 100 MA for several bars. If this happens, then my personal bias would turn Bearish with the 11750 zone being the next area to attack.
Bearish targets :-
- 11839 (Extension of Daily range – 22 day avg. 212 pips)
- 11776 (Top end of key zone)
- 11728 (Yesterday’s lows)
Bullish targets :-
- 12051 (Yesterday’s high)
- 12111 (61.8% retracement from April 10th highs & close to Daily R1 Pivot of 12124)
- 12200 (price will meet resistance from 12189-11225)