European indices rally as Fed and BoE set to hike rates
The FTSE 100 and DAX have opened higher but the Nasdaq remains subdued ahead of this week’s US Federal Reserve and Bank of England meetings which should lead to a 25 basis point rate hike each.
FTSE 100’s recovery ongoing ahead of this week’s BoE rate decision
Last week’s rally in the FTSE 100 may continue on the back of mostly positive sentiment in Asia today with all eyes being riveted on the US Federal Reserve (Fed) and the Bank of England (BoE), both of which are set to begin hiking rates by 25 basis points.
Meanwhile investors closely monitor the situation in Ukraine.
A rise above the 200-day simple moving average (SMA) and last week’s high at 7,232 to 7,264 would engage the 27 January low at 7,321. If also bettered, the 55-day SMA and 2022 downtrend line at 7,441 would be next in line. Further up sits the 25 February high at 7,564 which should act as major resistance.
Minor support is seen at Friday’s 7,053 low and also between last Monday’s Doji high of 7,031 and the psychological 7,000 mark. Below it sit the 6,972 to 6,946 October and November lows.
DAX 40 rally continues on back of risk-on sentiment
The DAX 40 followed most Asian equity markets higher as investors expect the Fed to begin hiking rates by 25 basis points at the end of its two-day meeting on Wednesday while keeping a close eye on developments on the Russia and Ukraine crisis.
Last week’s high at 14,102 as well as the January, February and early March 2021 highs at 14,134 to 14,198 are in focus but together create a band of resistance. If overcome, the 22 February low at 14,306 is being targeted as well as the 25 February high at 14,678 which together form another resistance area.
Minor support comes in at Friday’s 13,277 trough with further potential support being found around the 7 March high at 13,151 and also around the minor psychological 13,000 mark.
Nasday 100 still hovers above key support
The Nasdaq 100 continues to range trade above its February and March lows at 13,106 to 13,033 ahead of the Fed's widely anticipated 25 basis point hike in its target fed funds rate which is due to be seen in the middle of the week.
While the index remains below Friday’s high at 13,862, downward pressure should retain the upper hand. Failure at the 13,033 February low would push the May 2021 low at 12,923 and the 38.2% Fibonacci retracement of the 2020 to 2022 advance at 12,880 to the fore.
Further down the August 2020 high and the March 2021 low can be seen at 12,466 to 12,212. The early March high at 14,395 would need to be exceeded for a bullish picture to emerge with the 15,131 to 15,165 resistance zone then being targeted. It consists of the 200-day SMA and a confluence of daily highs and lows seen since mid-January and should act as strong resistance.
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