Markets in the UK and Europe opened higher but have dropped back from the peak seen at the beginning of the session. To some extent this reflects how much a Greek deal had been priced in — even on Friday, as time ticked away, most investors would have predicted a deal, which is exactly what they got. In addition, there is still one little act to be played out this week as Greece submits its list of reforms to its creditors. If the measures are not enough then another meeting is scheduled for Tuesday.
Even then, the deal (if it survives the week) is only a temporary solution. We will have to do this all over again in a few months’ time, which perhaps explains why this morning’s trading has not exactly been bursting with optimism.
FTSE's RSI above 50
At last the index finds itself opening on the other side of 6900, but despite briefly trading above its all-time high the market has edged back. However, 6900 is now, at last, support on the downside. A failure to close above this important level will raise serious questions, but for the time being the relative strength index remains above 50 and continues to trend higher from its December low.
Friday’s out of hours high around 6940 is the new target on the upside, while if 6900 is lost then we look towards previous support around 6800.
DAX could suffer drop over Greek crisis
The DAX continues to hold gains and remains firmly ensconced above 11,000, even if the price, for the moment, is failing to move beyond 11,150. The index is sharply overbought on the hourly chart, and while there is one small part of the Greek crisis left to play out there is a possibility of a sharp dip.
Immediate support is likely around 11,000 and then towards 10,950, while a rising trend off the 10 February low at 10,600 would be the next area.
Dow eyes 18,300
December’s intraday high was 18,106, and while Friday saw a close above this line the index is dropping back to this support area this morning.
If the bounce from the beginning of February can be maintained then rising resistance is next found around 18,300. Meanwhile on the downside there is possible support at 17,920 and then 17,700.
A steady turn higher in all moving averages on the daily chart is encouraging, as is an RSI that continues to hold well above the 60 mid-point.