European indices bid on back of stronger US and Asian markets
Technical outlook on FTSE 100, DAX 40, and DOW, all of which have bounced off support.
FTSE 100 retains its slight bullish bias
Yesterday the FTSE 100 briefly slid to minor support at 7,566 amid ongoing fears about soaring inflation, central bank tightening and rising bond yields, before recouping its intraday losses.
Today the index is likely to stay above the 7,566 support level with the early April high at 7,671 remaining in sight, a rise above which would engage the January 2020 and February 2022 highs at 7,688 to 7,690.
Despite upside momentum flattening out over the past week or so, a series of higher highs and higher lows, the definition of an uptrend, remains to be seen on the daily FTSE 100 chart and will continue to do so while the index trades above the 7,536 to 7,522 zone. It contains the 23 March high and 4 to 12 April lows and should offer support, if revisited.
Below it meanders the 55-day simple moving average (SMA) at 7,457.
Minor resistance for today sits at yesterday’s 7,634 high, and more significant resistance in the 7,671 to 7,690 region. Were this resistance zone to be exceeded, the July 2019 high at 7,730 would be targeted next.
DAX 40 sees minor recovery rally
The descent in the DAX 40, caused by the US Federal Reserve’s (Fed) hawkish stance and it's mention of a rapid balance sheet reduction, as well as the ongoing war in Ukraine and worries about the outcome of the French presidential election, last week to the index briefly below the 38.2% Fibonacci retracement of its March rally at 13,975, to 13,882, before stabilising.
As long as last week’s low at 13,882 isn’t slipped through, a recovery towards the 31 March low at 14,323 and the 55-day SMA at 14,420 is on the cards.
For the March uptrend to resume, the 5 April high and this year’s downtrend line at 14,582 to 14,605 would need to be exceeded.
Failure at last week’s 13,882 low would push the 24 February low and 50% retracement at 13,795 to 13,680 to the fore. This area offers potential support ahead of the 15 March trough at 13,577.
Dow nears the 200-day SMA at 35,026
The Dow Jones Industrial Average’s two-week long decline amid rapidly rising Treasury yields on expectations of a more aggressive Fed tightening to tame soaring inflation looks to have ended last week in the key 34,181 to 33,979 support area.
It consists of the 22 February to early March high as well as the breached 2022 downtrend line which, because of inverse polarity, acted as a support line, from where the current up leg began. A rise towards the 2022 resistance line, 200-day SMA and 5 April high at 35,010 to 35,105 is currently underway.
The next higher March peak at 35,383 will need to be overcome for the bulls to be firmly back in the driving seat. Slips should find support between the 1 April low and Monday’s high at 34,625 to 34,537.
Further down the 55-day SMA can be spotted at 34,351.
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