FTSE 100, DAX 40 and Dow remain sidelined
Outlook on FTSE 100, DAX 40 and Dow amid hopes of China reopening.
FTSE 100 remains above 200-day SMA post UK autumn statement
The FTSE 100 dropped back towards the 7,300 zone but continues to be supported by its 200-day simple moving average (SMA) at 7,321 post the UK autumn budget which largely didn’t deviate from what had been widely expected.
The fact that the windfall tax on electricity generators and energy companies wouldn't be as high as some have feared helped the index recover, as did Friday morning’s UK October month-on-month retail sales data which came in at a better-than-expected 0.6% versus a revised -1.5% in September.
GfK Consumer confidence also improved with a better-than-expected -44 versus a forecast -46 and -47 in the month prior.
Minor support below the 200-day SMA, the uptrend channel support line and Thursday’s low at 7,321 to 7,293 can be found at last week’s low at 7,242. While the index stays above this level, the October-to-November uptrend remains intact, though.
A slip through last week’s low at 7,242 would put the early November high at 7,221 and 8 September low at 7,174 on the map. Further down sits strong support at 7,131 to 7,104, consisting of the August low, early October high and 55-day SMA.
Resistance can be seen at last week’s high at 7,429, a rise above which would lead to the August and September peaks at 7,515 to 7,577 being eyed.
The DAX 40 continues to range trade amid China’s reopening prospects
The DAX 40 continues to be sidelined in a tight trading range above Tuesday’s 14,125 low and its November uptrend line amid of hopes that China will soon reopen.
While 14,125 underpins, the index is expected to better Tuesday’s high at 14,442, in which case the April high at 14,599 will be in focus. Further up the June peak can be seen at 14,712 and the March high at 14,927.
Below Tuesday’s low at 14,125 lies the minor psychological 14,000 mark and the August high at 13,976.
Dow Jones Industrial Average
The Dow Jones Industrial Average’s (Dow) minor retracement lower in the course of this week has so far taken it to Thursday’s low at 33,146 amid the longest period of low volatility seen since September 2021.
Since the indices’ recent high at 34,010 hasn’t been confirmed by a higher high on the daily RSI, negative divergence can be made out on the daily chart. It often acts as an early warning signal of either a trend correction, as is currently being seen, or a reversal.
Failure, meaning a daily chart close below 34,010 would engage the early November high at 33,075, a slip through which could lead to the 10 November low and the 200-day SMA at 32,425 to 32,420 being revisited.
Were the current consolidation phase to be followed by further upside, however, and the recent high at 34,010 be exceeded, the August peak at 34,285 would be in the picture.
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