FTSE 100, DAX 40 and S&P 500 in recovery mode
Outlook on FTSE 100, DAX 40 and S&P 500 ahead of Friday’s US Services PMI data release.
FTSE 100 recovers after gains on Wall Street
Having slid close to its 10 February low at 7,850 on Tuesday amid stronger-than-expected French inflation data, the FTSE 100 is heading back up again after Atlanta Fed President Raphael Bostic’s backed a smaller 25-basis point rate hike at the March committee meeting, leading to gains on Wall Street overnight.
The FTSE 100 is thus heading back up towards last Wednesday’s 7,973 high and the psychological 8,000 mark. Further up the index’s all-time record high sits close to the 8,500 mark.
Support can be spotted around the 7,876 mid-January high and at the 22 and 24 February lows at 7,879 to 7,870.
Only if the 10 February and this week’s lows at 7,854 to 7,850 were to be slipped through on a daily chart closing basis, would a medium-term top likely be formed with the late January low at 7,708 then representing the next downside target.
DAX 40 recovers from Thursday’s intraday one-month low
On Thursday, the DAX 40 formed a bullish Hammer formation on the daily candlestick chart, having briefly slid to a one-month low before bouncing on the back of recovering US equity markets ahead of today’s European Central Bank (ECB) committee member speeches and among a plethora of European services and PMI data.
The February-to-March resistance line at 15,470 represents a possible upside target, together with the early March high at 15,480.
While the next higher late February high at 15,556 isn’t overcome on a daily chart closing basis, however, the index remains in a sideways trading range with a small downward bias since a series of lower highs and lower lows can be made out on the daily chart since the index’s February high.
Support can be found at the 15,272 to 15,245 support zone which is made up of the early to mid-February lows and the, on Thursday briefly breached, October-to-March uptrend line.
S&P 500
The S&P 500 once more bounced off the 200-day simple moving average (SMA) and formed a Bullish Engulfing pattern on the daily candlestick chart on Thursday before closing along the 55-day simple moving average (SMA) at 3,878 amid less hawkish comments by the Atlanta Fed President Raphael Bostic.
Friday awaits US ISM Services PMI which will be watched closely by market players as it may give a good indication as to where the Fed is headed in terms of its monetary policy.
The now breached October-to-March uptrend line at 4,002 may well cap the upside on Friday but if it were to be exceeded, the 23 and 27 February highs at 4,018 to 4,026 may be reached.
Good support remains to be seen at last and this week’s lows as well as the 200-day simple moving average (SMA) at 3,942 to 3,920. If slid through, the 19 January low at 3,886 would be next in line.
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