Indices boosted by positive Asian session ahead of Fed rate decision
Outlook on FTSE 100, DAX 40 and Dow ahead of the highly anticipated US rate decision.
FTSE 100 flirts with key resistance
On Tuesday the FTSE 100 probed but failed to overcome its key 7,349 to 7,373 resistance zone, made up of the late June and 20 July high as well as the 200-day simple moving average (SMA). A rise and daily close above this level would confirm a double bottom with its upside target coming in around this year’s highs at 7,621 to 7,688.
The index remains technically bullish in the short-term whilst it manages to stay above Thursday’s low at 7,199, following last week’s first bullish week in a month which occurred after better-than-expected UK Gfk consumer confidence data for July and several better-than-expected US earnings reports.
Immediate minor support sits between Friday’s 7,231 low and the 7,225 mid-July high with further support lying at Thursday’s low at 7,199, a potential drop through which would void the current bullish outlook and instead target the May low at 7,157.
DAX still consolidates close to key resistance between 13,444 and 13,447
The DAX 40 came off its 13,444 to 13,447 June 21 and current July highs to Tuesday’s 13,030 low as Russia announced it would reduce gas flows through the re-opened Nord Stream 1 pipeline to 20% from Wednesday, having previously opened it on schedule after a planned ten-day maintenance shutdown.
While 13,030 underpins, another attempt at overcoming the 13,444 to 13,447 resistance area may be made, a rise above which would engage the mid-June high at 13,676. If also exceeded, a medium-term bullish reversal could lead to a several week-long rally taking the DAX 40 back towards its March-to-June highs at 14,712 to 14,927.
On the way up lies the mid-May low at 13,685. Support below Tuesday’s low at 13,030 sits at the 8 July high at 13,021 and also at the 19 July low at 12,823.
Dow consolidates below its recent high
The Dow Jones Industrial Average manage to heave itself up to 32,216 as the US earnings season hit full throttle and managed to get close to the February and March lows at 32,234 to 32,340 before consolidating in a tight trading range ahead of Wednesday’s Federal Open Market Committee (FOMC) meeting and expected 75-basis point (bps) rate hike, although a 100bps hike cannot be ruled out either.
For further upside to gain traction, the March low at 32,340 should be overcome in which case the late May and early June highs at 33,162 to 33,460 would be targeted.
Only failure at last Thursday’s low at 31,523 would negate the current short-term bullish outlook.
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