Calm before the storm for indices

​​FTSE 100 stays bullish short-term while above 7,199

The FTSE 100 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.

It came after better-than-expected UK Gfk consumer confidence data for July which followed UK inflation which surged to its highest level since 1982 to 9.4% in June.

A prolonged summer rally thus remains on the cards but for it to occur, a daily close above last week’s and the late June highs as well as the 200-day simple moving average (SMA) at 7,349 to 7,372 needs to ensue, ideally on a Friday weekly closing basis.

If the 7,362 late June high were to be overcome, a double bottom would be formed with its upside target coming in around this year’s highs at 7,621 to 7,688.

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 7,198, a potential drop through which would eye the May low at 7,157.

DAX consolidates close to key resistance between 13,444 and 13,447

Last week, the DAX 40 rallied to its 13,444 June 21 high as Russia resumed its gas exports through the Nord Stream 1 pipeline on schedule after a planned ten-day maintenance shutdown.

Since then, the DAX has been consolidating below last week’s high at 13,447 as the European Central Bank (ECB) decided to hike rates by 50-basis points (bps) rather than 25bps and elaborated on its new Transmission Protection Instrument.

If the DAX 40 were to rise and also close on a daily basis above the 21 June and last week’s highs at 13,444 to 13,447, the next higher mid-June high at 13,676 would be targeted. If also bettered, 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 Thursday’s low at 13,099 can be spotted at the 8 July high at 13,021.

Nasdaq 100 remains bullish ahead of FOMC

Last week the Nasdaq 100 left its June and July ascending triangle to the upside which has medium-term bullish implications as market players look ahead to Wednesday’s Federal Open Market Committee (FOMC) meeting and Federal Reserve (Fed) rate decision.

The rise above key resistance between the late June and early July highs at 12,180 to 12,227 has pushed the index to above the mid-May high at 12,588, to last week’s high at 12,670, before consolidating.

Once the 12,670 high has been exceeded, the June peak at 12,942 would be in focus. A sustained summer rally taking the index to the May high at 13,554 may currently be in the making.

Support below Friday’s low at 12,319 is seen at 12,227 to 12,180 with further minor support found along the 55-day SMA at 12,025.