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    IronFX Intraday Comment | DAX futures | 15/02/2016

    • The dollar traded higher or unchanged against most of its major counterparts during the European morning Monday. The greenback traded higher against SEK, GBP, CHF and EUR in that order, while it traded lower only against NZD. The greenback remained virtually unchanged against AUD, JPY, CAD and NOK.

    • European equities opened the day higher and continue to trade north during the European morning. The positive sentiment that drove Asian stocks higher rolled over into the EU markets, with Euro Stoxx 50, Germany’s DAX and the UK FTSE 100 up 2.5% on average by the time of writing. The rally probably got an extra boost following news that the ECB is in negotiations with the Italian government over buying bundles of bad loans from Italian banks as part of the QE program. ECB officials have already signaled that there is high possibility for further easing in March. As a result, this makes us believe that one of the most likely tools the Bank will consider at the March meeting is the expansion of its current QE program, although we don’t rule out another rate cut or a combination of both. ECB President Mario Draghi is scheduled to speak before the European parliament later today, and investors will looking for hints on the likelihood and preferred instruments for further easing. Any comments from Draghi on the possibility of the ECB buying bad loans could cause equities to continue their rally and the euro to extent today’s losses.

    • DAX futures opened the European session with a gap up and continued trading higher during the morning. The gap brought the index above the resistance (now turned into support) line of 9100 (S1) and the price is now headed towards the crossroad between the key resistance area of 9300 (R1) and the downside resistance line taken from the peak of the 30th of December. If buyers prove strong enough to overcome that key area, I would expect them to initially aim for the 9470 (R2) line, defined by the peak of the 5th of February. Our short-term oscillators reveal upside momentum and support somewhat the case. The RSI edged up and crossed above its 50 line, while the MACD, although negative, stands above its trigger line and points north. What is more, there is positive divergence between both the indicators and the price action. On the daily chart, I see that since the 1st of December the index has been printing lower peaks and lower troughs, something that keeps the longer-term picture negative. Therefore, I would treat the recovery from 8650, or any possible extensions of it, as a corrective move, at least for now.

    • Support: 9100 (S1), 9000 (S2), 8800 (S3)

    • Resistance: 9300 (R1), 9470 (R2), 9625 (R3)


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