Nikkei 225, FTSE 100 track NASDAQ 100 lower
Nikkei 225, FTSE 100 track NASDAQ 100 lower as US yields rise to multi-month highs and some US corporate earnings disappoint.
Nikkei 225 snaps three-day winning streak as it tracks US peers lower
The Nikkei 225's rally since this weekend’s election result at which Japan's ruling party lost its parliamentary majority has taken it to Wednesday’s 39,719 two-week high before tracking US markets lower.
The 200-day simple moving average (SMA) at 38,594 is being revisited ahead of the 55-day SMA at 38,176. While the next lower August-to-October tentative uptrend line at 37,760 and, more importantly, last week’s low at 37,366 underpin, the medium-term uptrend will stay intact.
A rise above this week’s high at 39,719 would likely engage the late September high at 39,942 and the psychological 40,000 mark.
FTSE 100 falls through key support
The FTSE 100's fall through its key 8,183-to-8,153 support area following Wednesday’s UK budget has also taken it through the June-to-early July lows at 8,112-to-8,106 and the 200-day SMA at 8,101 with the late July low at 8,056 being next in line ahead of the psychological 8,000 mark.
Minor resistance above the previous support zone, now because of inverse polarity a resistance zone, comes in at the September-to-early October lows at 8,153-to-8,196. Further up sits Friday’s 8,222 low, above which lies the 23 October low at 8,240. For the bulls to be back in control a rise and daily chart close above Tuesday’s high at 8,326 would need to be seen. Such a bullish reversal currently looks highly unlikely, though.
NASDAQ 100 form bearish engulfing pattern
The NASDAQ 100's advance from last week’s low at 19,928 has taken it to a 3 ½ month high at 20,652 on Tuesday, close to its July peak at 20,760, before forming a bearish engulfing pattern on the daily candlestick chart on Wednesday amid higher US Treasury yields and mixed corporate earnings.
The bearish chart formation points to at least short-term downside pressure being seen ahead of the US 5 November election with the August-to-October uptrend line at 20,030 and last week’s low at 19,928 representing the nearest downside targets.
A fall through 19,928 could trigger a deeper correction towards the 200-day SMA at 18,877.
Minor resistance can be spotted at the 20,316 September peak, followed by the 22 October high at 20,455.
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