The DAX is surging higher in trading today, up over 200 pips on the day, clearing 11900 and 12000 in just one hour! Some dovish statements from central bank members have helped lift market sentiment.
From the U.S., the president of the Federal Reserve Bank of Boston, Eric Rosengren commented that the Inflation target should be reviewed. He thinks the 2% target is too low. Essentially this means lower interest rates, which would then boost equity markets further as investors seek yield – see full article here.
From Europe, the strength of European unity was cemented after comments from ECB Vice President Vitor Constancio on Monday. He claimed how Greece would not be removed from the Euro if it defaults to one of its creditors as “The treaty doesn’t foresee that a country can be formally legally expelled from the euro,” he said – see full article here.
Looking at the Hourly chart of the DAX below, one can see the massive advancement of the Index in trading today. After clearing the 11840/11860 zone in yesterday’s session, price lingered, failing to fall back below. Bulls used this 11840 as a level to define risk against, with more buy orders triggered just above the 11900 level when European bourses opened this morning. Price has flown through the 38.2% retracement resistance level of last weeks sell off at 11927, broken the Hourly 100 moving average (blue line in the chart below), the 50% level at 12019 and now approaching the Hourly 200 MA (green line in chart below).
(click to enlarge)
CONCLUSION – NEUTRAL
The DAX still needs to reclaim the Hourly 200 MA for my sentiment to turn Bullish. However, the better than expected European ZEW number just released of 64.8 vs 63.7 should help fight off any attacks from the bears.
For bulls, buy opportunities reside on the highs of 12079 being taken out. For risk averse traders, they can define their risk against the 12015/12020 area and below that the Hourly 100 MA, currently at 11988.
For bears, shorting opportunities reside against the Hourly 200 MA which comes in close to the 61.8% retracement level of 12110 or on a break below the Hourly 100 MA.
Bearish targets :-
- 12000
- 11961 (Daily R1 Pivot)
- 11927 (38.2% level)
Bullish targets :-
- 12100
- 12120 (Hourly 200 MA)
- 12189 (Bottom end of 12220 zone & close to Daily R3 Pivot of 12191)