FTSE 100, DAX 40 and Nasdaq 100 boosted by Alibaba split
Outlook on FTSE 100, DAX 40 and Nasdaq 100 as the Alibaba split into six groups points to an end of China’s crackdown on tech companies.
FTSE 100 remains above the 200-day SMA
The FTSE 100 index, even though it dropped to 7,331 on Friday due to the banking crisis, has traded above the 200-day simple moving average (SMA) at 7,435 for the past three days as bank shares stabilise.
While the two-week support line and 200-day SMA at 7,435 to 7,432 underpin on a daily chart closing basis, the index will remain short-term bullish with a rise above Tuesday’s high at 7,525 putting last week’s high at 7,587 in focus.
If the latter level were to be overcome, the 15 March high at 7,641 would be eyed, above which strong resistance can be spotted at 7,708 to 7,724, consisting of the mid-January and early February lows.
Support below the 7,435 to 7,432 zone can be spotted around the 7,296 December low.
DAX 40 remains bullish
The DAX 40 is heading higher again on diminishing concerns about contagion in Asian banks and as Alibaba shares boost Asian markets.
The shares of the Chinese technology giant rallied strongly as it announced a major reorganisation that will split it into six business groups to “unlock shareholder value.” The split is seen as marking the end of China's crackdown on the tech sector which helped Asian markets rise and led to a higher open in European indices.
The DAX 40 is seen heading back up towards the 55-day SMA at 15,272, above which lurks last week’s high at 15,304. Immediate support can be seen along the March support line at 15,055. Minor support below this level can be found at the mid- to late January lows at 14,992 to 14,904 as well as at the 13 March low at 14,885.
From a medium-term perspective, as long as Friday’s low at 14,801 holds on a daily chart closing basis, further upside is expected to be seen with the resumption of the October-to-March medium-term uptrend becoming a distinct possibility once last week’s high at 15,304 has been overcome.
Nasdaq 100 expected to resume its ascent
This week’s negative start to the week - with two consecutive lower days being seen on the daily chart - and having taken the Nasdaq 100 to a one-week low at 12,517, is expected to be followed by a positive session, boosted by the Alibaba split into six different entities which implies that China’s crackdown on technology companies is coming to an end.
A rise and daily chart close above Tuesday’s Hammer formation high at 12,712 on the daily candlestick chart would engage the mid-February high at 12,747 and also Monday’s high at 12,850, a rise above which would spell the resumption of the medium-term uptrend taking the index back to the February-to-March highs at 12,896 to 12,947 and above.
Were a slip through the March uptrend line at 12,590 to be seen, however, Tuesday’s low at 12,517 would be back in view, below which lies the 20 March low at 12,398.
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