European indices flat to higher ahead of BoE rate announcement
The FTSE 100 and DAX 40 are taking a breather while Asian indices continue to rally, having rallied strongly on hopes of a Russia-Ukraine peace accord and Chinese stimulus package yesterday.
The FTSE 100 remains bid ahead of today’s BoE rate decision
Last week’s FTSE 100 rally is ongoing ahead of today’s widely anticipated Bank of England (BoE) 25 basis point hike, the third in a row for the central bank.
Yesterday’s rise above the 200-day simple moving average (SMA) and last week’s high at 7,234 to 7,264 has taken it to the 27 January low at 7,321 around which it is consolidating short-term.
Above yesterday’s high at 7,335 lurk the 2022 downtrend line and 55-day SMA at 7,407 to 7,433. Further up sits the 25 February high at 7,564 which should act as major resistance.
Support below the 200-day SMA at 7,235 can be spotted between Tuesday and Friday’s lows at 7,075 to 7,053 and also between last Monday’s Doji high of 7,031 and the psychological 7,000 mark.
DAX 40 rally approaches key resistance amid risk-on sentiment
The DAX 40 followed US and Asian equity indices higher as hopes of an agreement between Russia and Ukraine, an economic stimulus package in China and a ¼ point rate hike in the US fed funds rate proved to be bullish for indices globally.
The 25 February high at 14,678 is now in focus, ahead of a key multi-year resistance area which sits between 14,840 and 14,917. Because of inverse polarity, this area is to now act as strong resistance.
Minor support lies between last Friday’s high at 14,102 and the one-month uptrend line at 14,040.
Hang Seng recovers by another 6% on hopes of Chinese stimulus package
The Hang Seng’s sharp drop by around -25% from its February high at 25,113 ended at Tuesday’s 18,132 low on news that China may provide an economic stimulus package to help its economy as it suffers from the spread of Covid-19 and countrywide lockdowns.
This low was made marginally above key support at 18,083 to 18,003, consisting of the 2012 and 2016 lows, and has been followed by a rally of over 15% in the past couple of days alone.
The break through the two-month downtrend line at 20,000, which now represents support with the 9 March low at 20,101, targets the 55-day SMA at 23,329.
On the way there resistance may be encountered at the 22,708 January low.
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