Small gains seen in European indices after yesterday’s pullback
The FTSE 100, DAX 40 and Dow snapped back yesterday, but so far remain above support, as oil prices continue to rise and stoke inflation fears.
FTSE 100 supported by 55-day SMA
The recovery in the FTSE 100 resumes after yesterday’s pullback to the 55-day simple moving average (SMA) at 7,436 which acted as support, together with the March uptrend line, ahead of tomorrow’s UK GfK consumer confidence survey for March.
The 25 February high at 7,564 remains in focus but is likely to act as resistance, if reached today. Once bettered, the February peak at 7,688 should be next in line.
Below the 55-day SMA, one-month uptrend line and yesterday’s low at 7,436 to 7,419, the breached 2022 downtrend line - now support line - can be spotted at 7,352.
DAX 40 inches up after yesterday’s market retreat
Yesterday the DAX 40 came off its 14,497 to 14,584 resistance area as investors grapple with rising oil prices and the prospect of larger rate hikes than previously anticipated.
While the index stays above Friday’s low and the previous Friday’s high at 14,106 to 14,102, however, upside pressure should be maintained with the 25 February high at 14,678 remaining in sight, ahead of a key multi-year resistance zone which sits between 14,840 and 14,917 and goes back to May 2021.
Because of inverse polarity, this area is likely to act as strong resistance. A fall through the 14,106 to 14,102 support zone would engage the 9 March 13,995 high and also the 16 March 13,927 low.
Dow’s bearish reversal points to short-term retracement lower
Following yesterday’s Bearish Engulfing pattern on the daily Dow Jones Industrials Average candlestick chart, due to bonds having suffered unprecedented losses globally and another surge in the oil price stoking inflation fears, a short-term retracement lower seems probable.
The late February and early March highs at 34,181to 33,979 may be reached over the coming days but should offer good support. Further down sits the December low at 33,952.
A rise above Tuesday’s 34,899 high and ideally above the 200-day SMA at 34,989 is needed for the bulls to regain control. In this case the February peak at 35,862 would be back in the frame.
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