European indices recover on back of strong rebound in Asia ahead of Fed rate announcement
FTSE 100 and DAX 40 benefit from strong rally after several days of losses in Hang Seng and other Asian indices on hopes of Chinese stimulus package.
FTSE 100 recovery rally endures ahead of Thursday’s BoE rate decision
Last week’s FTSE 100 rally has resumed on the back of stronger US equity markets with today’s 6pm GMT US Federal Reserve (Fed) rate announcement and FOMC statement being highly anticipated by market participants while they monitor if and how Russia will pay a $117 million debt amid ongoing peace talks between Russia and Ukraine.
Today’s rise above the 200-day simple moving average (SMA) and last week’s high at 7,233 to 7,264 is good news for the bulls with the 27 January low at 7,321 about to be reached. If overcome, the 55-day SMA and 2022 downtrend line at 7,418 to 7,444 will be targeted. Further up sits the 25 February high at 7,564 which should act as major resistance.
Minor support can be found between yesterday 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. Below it sit the 6,972 to 6,946 October and November lows.
DAX 40 rally continues amid risk-on sentiment
The DAX 40 followed Asian equity indices higher as hopes of an economic stimulus package in China prompted a swift recovery after several days of heavy losses.
This comes after a rebound on Wall Street with eyes set on today’s Fed rate announcement which is expected to kick off a post-pandemic rate hiking cycle with a 25 basis points rise.
The 22 February low at 14,306 and the 25 February high at 14,678, which together form a resistance zone, are currently being eyed amid ongoing peace talks between Russia and Ukraine. Further up lies a key multi-year resistance area between 14,840 and 14,917.
Minor support below the accelerated uptrend line at 13,810 comes in at Friday’s 13,277 low with further potential support being found around the 7 March high at 13,151 and also around the minor psychological 13,000 mark.
Hang Seng recovers by around +10% on hopes of Chinese stimulus package
The Hang Seng’s sharp drop by around -25% from its February high at 25,113 paused at yesterday’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.
What is interesting from a technical perspective is that yesterday’s low was made marginally above key support at 18,083 to 18,003, consisting of the 2012 and 2016 lows.
While this major support zone underpins, a recovery towards Thursday’s high at 21,089 seems to be underway with the two-month downtrend line at 20,260 representing an obstacle today.
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