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 100 selloff challenging two-month trendline
This week has seen a big bearish move in the FTSE 100. There has been the move below the dominant 2015 trendline of support, followed by a retest of new found resistance. That is the moment we are looking for as a sell opportunity, as the retest often leads to the most significant gains.
The move lower threatened to become something significantly more destructive yesterday, with the attempt to break below the 100-day simple moving average and trendline dating back to early April. However, with price having closed above those levels, we are now looking at support around 6924.
Any close below those levels would point to a move back towards 6808. However, should support hold, the obvious resistance level in view would be at 6975. I personally believe we will see some strength coming back into play throughout today, but the services PMI figure due out this morning could have a major part to play in affairs.
DAX trendline retest likely to cap downside momentum
Recent weakness in the DAX has brought about a move back to the descending trendline which previously provided the upper threshold of the descending channel throughout late April and early May. Having now retested the trendline, we have started to see some strength come back into play and I do think this will represent the beginning of a recovery in the German index.
With that in mind, the technical outlook would call for a move towards 11,618, 11,800 and 12,000 before long. However, I would be hesitant because much of the direction going forward will be driven by any news coming out of Greece and therefore the fundamental are a particularly important factor to bear in mind.
Dow Jones pullback could come to an end
The Dow Jones industrial average saw a substantial move lower in the early part of the session. However a bounce from the 100-day SMA and ascending trendline could point to a move higher in the coming days. The MACD histogram is showing signs of turning back towards the downside while the stochastic is also looking like we could see a bullish cross in the coming days.
While the descending trendline appears to be providing resistance for the time being, the bullish outlook in the DAX and to some extent the FTSE 100 points to a move back towards the 18,200 mark should we clear the near term 18,100 resistance level.