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FTSE 100 gaps higher, breaking back towards resistance zone
Friday’s selloff saw the headline index close below the key support level of 7065. While I was looking for a move lower, the size of it took me and many by surprise. However, warning signs rang of a bounce higher by the clear respect shown to the 6975 support level as provided by the 2 March peak.
Today’s gap higher is representative of the wider markets which have all seen a bounce from weekend newsflow and sentiment shift. Having brought the price back to the previous support level of 7065, I am now watching to see whether the price can close back into the resistance zone above 7065. If not, I could see 7065 providing enough resistance to see the FTSE 100 come back off today’s early morning highs.
Thus for the time being, I am watching to see if a close above 7065 can happen, which would likely indicate the creation of new highs later this week. However, 7065 has been important as resistance in the past and thus selling could be a sign that the bears aren’t finished in this market.
DAX meets moving average support and jumps higher
Last week’s sharp selloff in the DAX brought the price down to an absolutely crucial support zone provided by the 50-day simple moving average (SMA), currently at 11,654, and the mid-March low of 11,618. A move below 11,618 would have been the most important move, as this would mean the creation of a new lower low, providing questions as to the longevity of this bull market.
However, the price saw support provided right on the 50-day SMA and has been moving higher since. So far, resistance provided around previous support levels between 11,784 and 11,798 have been cleared, and thus bulls appears to be in charge. With this in mind, I would be surprised to see anything other than a move back towards 12,000 as bulls buy back in to this outperforming market of 2015.
Dow gap opens to 20-day SMA support
The slowing peaks seen in the Dow Jones appears to have been a sign of an impending selloff that finally came to fruition on Friday. However, with today’s gap higher we have seen the price open back up at the 20-day SMA. Despite price having come off somewhat after early gains, I am looking for the bulls to have more of the dominance this week compared with last, and expect to see the price return to 18,017 in the near future. Short-term consolidation appears to be minimal so far and thus, there appears to be further left in the tank of this resurgence.