FTSE 100, DAX 40 and Dow rise on US debt ceiling optimism
Outlook on FTSE 100, DAX 40 and Dow ahead of Tuesday’s US debt ceiling negotiations.
FTSE 100 begins week on a stronger footing
The FTSE 100 is seen to recover further from last week’s low at 7,679 and has last week’s high at 7,817 in its sights ahead of Tuesday’s UK unemployment report. If this level were to be exceeded on a daily chart closing basis, the UK blue chip index may resume its ascent towards the 8,000 region.
Good support can be spotted between the March-to-May support line at 7,702 and the early and mid-May lows at 7,689 to 7,679 below which the 38.2% Fibonacci retracement of the March advance can be seen at 7,657.
While this area underpins, the odds favour an eventual resumption of the medium-term uptrend.
DAX 40 is drawn to the psychological 16,000 mark
The DAX 40 remains within its two-month sideways trading range but is once again drawn to its minor psychological 16,000 mark amid the publication of eurozone industrial production data and ahead of Tuesday’s final eurozone Q1 Gross Domestic Product (GDP) data release.
Only a rise and daily chart close above the early to mid-May highs between 16,005 to 16,009 would put the 2021 to 2023 resistance line at 16,168 on the map.
Slips should find support along the March-to-May tentative uptrend line at 15,822 and below it at last week’s low at 15,756.
While the next lower early May trough at 15,659 holds, this year’s medium-term uptrend will remain intact.
Optimism around US debt ceiling helps Dow stabilise
While investors remain torn between expectations of a dovish turn from the Fed later this year and the uncertain macro-economic outlook the Dow Jones Industrial Average continues to range trade above its 200-day simple moving average (SMA) at 32,783.
Optimism around the US debt ceiling with US president Biden expected to meet House Speaker Kevin McCarthy and other congressional leaders on Tuesday to discuss budget negotiations to avoid a default has helped the Dow recover from around its 55-day SMA at 33,142 which offered support last week.
The Dow may thus try to heave itself back up towards last week’s high at 33,782, a rise and daily chart close above which is needed for a bullish medium-term picture to emerge, however.
Good support can be found between the March-to-May support line, 55-day SMA and last week’s low at 33,150 to 33,106.
While the next lower early May low at 32,935 holds on a daily chart closing basis, the medium-term uptrend is deemed to stay intact.
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