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GDP data from the eurozone has helped to maintain the ‘risk on’ atmosphere that prevailed yesterday. Germany powered ahead with 0.7% quarter-on-quarter growth for Q4 2014, ahead of the 0.3% forecast, while other economies such as the Netherlands enjoyed good growth. The fly in the ointment was France, which grew at just 0.1% for the final quarter of last year.
Meanwhile, the European Central Bank’s decision to extend emergency funding to Greece provides some more time for the two sides to reach an agreement. Even Angela Merkel has softened her tone, allowing investors to be guardedly optimistic about the situation.
FTSE close to 6900
Very little has changed since yesterday in terms of FTSE levels. Although closer to 6900 this morning than yesterday, we still await a firm breakout above here, while 6800 acts as support on the downside.
Hourly resistance around 6850 appears to have been broken, which will expedite another attempt to hit 6900.
DAX approaches 11,000
Optimism returned to eurozone markets yesterday, and this has allowed the DAX to bounce off the 20-day moving average and prepare itself for another attempt on the 11,000 area.
The relative strength index has recovered from lows of earlier in the week, moving back above its 10-DMA, setting it on a course to return to overbought levels.
A close above 11,000 will likely result in an acceleration onwards into fresh new territory, as stops are activated. A long weekend in the US (Monday is Presidents Day) means that any gains made today could continue to be held and even extended in a volume-light session.
Dow pushes through 17,900
Having now pushed through the January highs around 17,900 once more, the Dow Jones is on course to retest the peak above 18,000. It has been a week for buying on the dips, as the US market finally looks to shake itself out of the volatility that dominated January.
Downside support is likely to be found around 17,900, and then on to the 100-hour MA, which provided a foundation for further gains earlier in the week.