European indices helped by stronger US and Asian markets
Outlook on FTSE 100, DAX 40 and Dow post Fed chair Congress testimony.
FTSE 100 tries to rally into week end
Stronger Asian equity markets on the back of another positive session on Wall Street have helped the FTSE 100 recover and may snap the index’s three-week losing streak as UK inflation hit a 40-year high amid the country's largest rail strike in 30-years.
The index managed to find support at 6,992 on Thursday, above last week’s three-month low at 6,966. As long as it underpins, a gradual recovery back towards this week’s high at 7,193 may take place. While it caps, the recent downtrend remains firmly entrenched, though.
A slip through 6,966 and the 6,946 October 2021 low on a daily chart closing basis would target the March low at 6,764.
Today resistance sits between the May low and yesterday’s high at 7,157 to 7,193.
DAX remains under pressure
The DAX 40 is flirting with last week’s 12,944 low, having so far dipped to 12,839 on Thursday ahead of Friday’s German ifo Business Climate for June which came in at a weaker than expected 92.3 versus an anticipated 92.8 and 93.0 in May.
A fall through this week’s low at 12,839 on a daily chart closing basis could lead to the March low at 12,432 being revisited. While the 12,944 to 12,839 support area underpins, though, and once the one-month downtrend line at 13,052 has been exceeded, the 14 June low at 13,220 may be retested on the way to this week’s high at 13,444.
For the current downward pressure to diminish a bullish reversal would need to take the DAX 40 to above this week’s high at 13,444 and ideally also above the mid-June high at 13,676 which was made within the 13,681 to 13,743 gap.
Dow continues its gradual advance
The Dow Jones Industrial Average continues to gradually advance towards its 31,146 to 31,381 gap, now that it has overcome its May low at 30,637. This as the Federal Reserve (Fed) chair, Jerome Powell, said in his testimony to Congress that there is a possibility of a recession in the US and that his commitment to bringing down price increases is “unconditional.”
On the way up minor resistance can be spotted at the 31,016 mid-June high. Support below the May trough at 30,637 comes in at the 14 June low at 30,142 and also at the 22 June low at 30,016.
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