SP500, DAX40 and FTSE100 price forecasts, 23 June 2023

S&P 500 – Price blowoff in play

As guided in our previous note, the three steepening dotted trend lines on the chart of the S&P 500 highlight what has been an accelerating uptrend on the index. This phenomenon is suggesting that the move higher could be overheating right now and is known as a ‘price blowoff’ in technical analysis terms.

The ‘price blowoff’ suggested a short-term pullback or correction of the longer term uptrend. This pullback from overbought territory has now started to take place.

Our preference remains to let weakness playout and then look for opportunity to join the longer-term uptrend. Such an opportunity could present itself with a bullish price reversal to end the short term move lower and suggest renewed gains. 4300 provides the initial support level where we would start looking for a bullish price reversal for long entry. Should this level not hold and instead the pullback extends past this support consideration, we would then instead hope to see a bullish price reversal closer towards the 4175-support level for long entry.

DAX40 – moving to range support

The long-term trend for the DAX40 remains up, although in the short to medium term we see the price trading within a range between levels 15715 (support) and 16330 (resistance).

The long-term uptrend suggests keeping a long bias to trades on the index. A bullish price reversal off either the 15715 or 15485 support level would consider long entry, with 16330 again the initial upside target from the move.

Should the price instead continue to correct and trade back below the 200-day simple moving average (200MA) (blue line), the longer-term uptrend would be considered to then be broken. Only on a move below the major low at 14665, would a new long-term downtrend be considered.

FTSE100 – near term support broken

The price of the FTSE 100 whipsawing back and forth through the 200MA suggests the index to be in a broad sideways trend for the time being. The break of support at 7560 has seen a relatively quick move towards the next level of support considered at 7410. The index has now moved into oversold territory.

Traders looking for long entry might prefer to see a bullish price reversal off the 7410-support level before targeting a move back towards the labelled resistance targets (7560 initially) on the chart above.

Should we not see a bullish reversal off the 7410-support level, and instead we see a price close below this level, traders might hope to see a reversal off the 7285 level instead for long entry.

If the price was to continue to retrace not and extend past the 7285 level a new long-term downtrend might instead be considered.