Dow in negative territory year-to-date while FTSE 100 and DAX 40 also point lower
Outlook on FTSE 100, DAX 40 and Dow as recent sell-off intensifies.
FTSE 100 slips in line with US and Asian indices
This week’s slide in the FTSE 100 is ongoing with the UK index following US and then Asian markets lower as investors fret about the Fed further raising its rates to tame inflation and on the back of some US retail giants warning about economic uncertainties.
Since the FTSE 100 continues to display triple negative divergence on the daily Relative Strength Index (RSI) and since a drop out of the rising wedge can now be seen, the chances of a top forming are increasing.
Last Wednesday’s low at 7,921 is thus back in sight, a slip through which will eye the 7,876 January peak. Only a fall through and daily chart close below the 10 February 7,850 low would have medium-term bearish implications with the late January low at 7,708 then being in focus.
Minor resistance now sits at Thursday’s low at 7,979 and can also be seen around the psychological 8,000 mark. More significant resistance can be spotted at the recent 8,044 to 8,050 highs.
DAX 40 may slip back towards support
The DAX 40 continues to trade sideways but short-term remains under pressure on global uncertainties and as annual inflation in Germany was confirmed at 8.7% in January, higher than the downwardly revised 8.1% in December.
This was due to a federal one-off payment to reduce the monthly payments for householder and small- to medium-sized companies’ gas and heating bills.
Were last Friday’s and Tuesday’s lows at 15,297 to 15,824 to be slipped through, the 15,272 to 15,245 January high and the 6 to 13 February lows would be targeted. Failure there on a daily chart closing basis could lead to the more significant 14,992 to 14,904 mid-to-late January lows being back in sight.
Minor resistance can now be found around last Thursday’s low at 15,412 and then at Tuesday’s high at 15,489. Whilst it isn’t overcome, downside pressure should retain the upper hand. Above this level lies the early February high at 15,553.
Dow drops back to negative territory year-to-date
The Dow Jones Industrial Average has been underperforming its peers since the beginning of the year and is the first major index to trade back in negative territory year-to-date with Tuesday’s over 2% drop due to further Fed rate hike fears wiping out all of its 2023 gains.
The late January low at 32,935 represents the next downside target, a fall through which would put the December trough at 32,474 back on the map.
Immediate resistance can be seen at the 33,266 25 January low and at the 33,343 10 January low with more significant resistance to be found between the 30 January and 17 February lows at 33,471 to 33,793.
Only a currently unexpected bullish reversal to above Monday’s 33,833 high would negate the current downward pressure.
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