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Indices taking a knock ahead of ECB meeting

Outlook on FTSE 100, DAX 40 and Nasdaq 100 ahead of ECB rate decision.

​FTSE 100 rejected by key long-term resistance zone

The FTSE 100 has been rejected by its key long-term resistance at 7,648 to 7,690 which consists of the January 2020 as well as this year’s February, April, May and current June highs as the UK was predicted to be the worst performing economy in G7 by the Organisation for Economic Co-operation and Development (OECD).

In its Economic Outlook on Wednesday the OECD lowered its 2022 global growth forecast to 3% due to the war in Ukraine, supply chain disruptions and a two-month long lockdown in China. Many of the hardest-hit countries are in Europe, which is highly exposed to the war through energy imports and refugee flows with the UK faring among the worst in terms of growth forecasts.

The current May low at 7,518 is back in sight, a slip through which on a daily chart closing basis may lead to another down leg being witnessed with the 200-day simple moving average (SMA) and the March-to-June uptrend line at 7,355 to 7,316 potentially being back in the frame.

Minor resistance now sits at this week’s highs at 7,637 to 7,647 and only a currently unexpected advance and daily chart close above the 7,690 January 2020 peak would engage the July 2019 high at 7,730.

DAX slips back to 14,315 to 14,282 support area ahead of ECB meeting

The DAX 40 continues to slide from Monday’s 14,712 high after Wednesday’s OECD Economic Outlook lowered its 2022 global growth forecast to 3% due to the war in Ukraine which has greatly impacted Germany due to its reliance on Russian oil and gas. Investors also await the European Central Bank’s (ECB) meeting and press conference.

The DAX has thus dropped back to support seen between the early and mid-May as well as last week’s low at 14,315 to 14,282. If fallen through on a daily chart closing basis, the 55-day SMA at 14,174 would be eyed next, below which the mid-April and 25 May lows can be spotted at 13,882 to 13,869.

For the May uptrend to resume, a rise above Monday’s high at 14,712 needs to be seen, in which case the major 14,840 to 14,927 resistance area would be back in the picture. 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 SMA at 15,050.

Nasdaq 100 trades sideways ahead of US CPI data

The Nasdaq 100’s recovery off its one-year low at 11,490 seems to have stalled at its early June high at 12,942 with the index having range traded ever since whilst market participants await the publication of US consumer price index (CPI) data for May on Friday.

The index continues to oscillate around a previous support line which dates back to the February and March lows. It remains bullish while this week’s low at 12,411 underpins on a daily chart closing basis.

If high inflation and growth fears were to push the Nasdaq 100 through the 12,411 low on a daily chart closing basis, a tumble back towards the 9 May low at 12,102 may ensue.

A rise above yesterday’s high at 12,778 would probably lead to the late May high at 12,880 being reached, above which the early June high can be found at 12,942.


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