The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
FTSE fails to hold highs
Overnight highs in FTSE 100 futures have not lasted and the index finds itself back below 7100 again. Two days of attempts to break through 7100 have now failed, with the prospect that momentum will now begin to shift to the downside. The move lower has not yet begun in earnest, with the 20-period exponential moving average (EMA) on the four-hour chart (7070) still providing some support. But now with the daily relative strength index (RSI) drifting lower we could be witnessing a repeat of the swift downward move seen in the second half of March.
Downside targets now lie around 7040, and then on to 6960, while the 50-day simple moving average (SMA) at 6905 stands in the background as a longer-term target. A solid close above 7100 is still lacking, but this is the level to beat if the FTSE is to maintain its strength.
DAX aims to test all-time highs
A sharp move down in the early part of the session brings the DAX back to its old friend the 14-day EMA at 12,119. Already buyers have stepped in to defend this area, with the moving average itself having been carrying out a remarkable job of providing support. The DAX has only closed below this moving average once since the beginning of the year, so today will be another litmus test.
A bounce higher still targets the all-time high, while a close below the 14-day EMA would signal another test of 11,800, the key support zone of the second half of March. With the RSI and stochastics still trending lower, the bears seem to be in control for now.
Dow favours the bulls
The Dow Jones finds itself resting on the trendline off the October lows, with the buyers still in control. A continuation of the move upward still targets 18,200 and then the March peak at 18,284. Tuesday’s bounce off the 50-day SMA (17,970) still signifies that the bulls have the upper hand. It will take a move back below this moving average to change the picture.