European indices open lower

​Sellers dampen Friday’s FTSE 100 2.6% rally

Friday’s 2.6% recovery rally in the FTSE 100 from last week’s 7,157 low, made close to the February low amid volatile trading due to recession fears, has been dampened by sellers early Monday morning who continue to worry about the outlook for the UK economy. 

Support below Wednesday’s 7,353 high can be spotted along the 200-day simple moving average (SMA) at 7,320 with further minor support coming in at the 7,299 April trough. Provided the latter level underpins, a continuation of the last few days’ advance is likely to take place in the course of this week.

A rise above today’s overnight high at 7,475 would push the 7,621 early May high back to the fore.

Above 7,621 still beckons key resistance which can be seen in the 7,657 to 7690 region. It contains the January 2020, February, and April highs.

DAX 40 losing upside momentum below this year’s downtrend line

The DAX 40’s recovery rally from last week’s 13,275 low, triggered by investors making use of good buying opportunities at discounted levels in sectors such as commodities, healthcare and utilities, seems to be running out of steam slightly below this year’s downtrend line at 14,210.

Together with the early May high at 14,315, the downtrend is expected to thwart any further upside today. If not, the late April peak at 14,599 should cap.

Slips today are likely to find support between the mid-April low and Wednesday’s high at 13,882 to 13,875. Further minor support can be found at the 13,807 2 May low and at the 13,538 April trough.

Investors need to bear in mind that a fall through last week’s low at 13,275 would signal the continuation of this year’s bearish trend with the March low at 12,432 being back in focus in such a scenario.

For a longer-term bullish picture to emerge, a rise and daily chart close above the late April high at 14,599 needs to be witnessed.

Nasdaq 100 awaits US retail sales data

The Nasdaq 100’s swift descent has so far taken it to its 11,689 one-year low amid soaring inflation, a looming recession and mainly disappointing earnings from its constituents.

The tech-heavy Nasdaq Composite fell 2.8% last week despite staging a recovery rally on Friday as investors sought out good buying opportunities at the market’s recent lows, while keeping an eye on the US Federal Reserve’s (Fed) rate hike cycle ahead of this week’s US sales data.

From a technical perspective as long as minor support around the 9 May low at 12,102 holds today, Friday’s high at 12,430 may be revisited.

However, sbove this level last week’s highs and the breached February-to-early May support line, now - because of inverse polarity - resistance line, at 12,545 to 12,660 are expected to cap.