Stronger start to European markets after losing week on Wall Street
Technical outlook on FTSE 100, DAX 40 and S&P 500 after Friday’s non-farm payrolls data.
FTSE 100 bullish while above 7,518
The FTSE 100 is seen heading back up towards its early and late May highs at 7,621 to 7,649, slightly above which the late April high can be spotted at 7,657, after a losing week on Wall Street and the UK coming back from a four-day Queen’s Jubilee weekend.
Traders continue to speculate on how aggressive monetary tightening will need to be to lower global inflation, but the FTSE 100 index will remain bullish while it trades above last week’s low at 7,518.
An advance and daily chart close above the 7,657 21 April high would engage resistance between the 7,657 to 7,690 January 2020, February, and April 2021 highs which is expected to thwart the first attempt of a breakthrough.
Above the 7,690 January 2020 peak lies the July 2019 high at 7,730.
DAX targets 14,840 to 14,927 zone while 14,282 underpins
The DAX 40, despite being shut today for Pentecost Monday, remains bid as China continues to remove tight Covid-19 restrictions after a two-month long lockdown ahead of Thursday’s European Central Bank (ECB) meeting, having last week slid back to but then bounced off the 14,315 to 14,282 support area which consists of the early and mid-May highs.
A rise above last week’s high at 14,643 would open the way for the major 14,840 to 14,927 resistance zone to be reached. It represents a previous key support area, made up of the May 2021 to February 2022 lows, which was slipped through in late February and which, due to inverse polarity, acted as resistance in late March.
Above it meanders the 200-day simple moving average (SMA) at 15,603.
Strong support remains to be seen between the early and mid-May as well as last week’s low at 14,315 to 14,282. While it holds, a bullish bias is being maintained.
S&P 500 tests support zone as first quarter earnings season draws to a close
The S&P 500 took a hit on Friday as a robust jobs report bolstered the US Federal Reserve’s (Fed) aggressive monetary policy stance to try to combat soaring inflation, making the index drop 1.2% last week.
Investors took the strong non-farm payroll (NFP) data, which showed the US economy added a higher than expected 390,000 jobs in May, to mean that the Fed will stick to its course of aggressive tightening.
From a technical perspective the swift recovery rally from its May low at 3,811 in the S&P 500 index has further to run, provided that it remains above last week’s low at 4,074 on a daily chart closing basis.
A rise above last week’s high at 4,203 on the Daily Financial Bet (DFB) would engage the 55-day SMA and early May high at 4,263 to 4,308. This resistance area needs to be exceeded, for a medium-term bullish trend reversal to gain traction and for the 200-day SMA at 4,449 to eventually be reached.
A slip through and daily chart close below Friday’s and last week’s lows at 4,099 to 4,074 would not bode well for the bulls, though, and could trigger a sell-off towards the minor psychological 4,000 mark.
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