Optimism is in short supply in Europe so far today, as indices here fail to emulate the gains seen in Asia. This is in part down to a recurrence of worries regarding everyone’s favourite member of the eurozone, Greece. Prime Minister Tsipras has informed Germany’s Chancellor Merkel that his country will soon run out of cash to pay its debts if no fresh aid is forthcoming. Pressure is increasing on Ms Merkel as popular discontent in Germany regarding the never-ending drama rises.
For now the line is the same – no Greek exit is being contemplated. But that could come under pressure if the eurozone continues to watch money being sent south for no real progress on reforms.
FTSE eyes gains above 7000
Like Richard III’s funeral cortege, the FTSE 100 has steadily wound itself higher, taking out 7000 on Friday to much acclaim. Today’s move lower should not unduly concern those with long positions, and even a move back in the direction of 6960 should find itself heading towards support.
On the hourly chart a rising trendline off the 13 March lows of 6715 has seen buyers step in, which would suggest support around the 6970 mark. For the time being I continue to look for fresh gains above 7000, with the first target being a daily close above Friday’s high of 7033.
DAX progress likely to continue
The DAX looked somewhat weak this morning but the March trendline remains intact, and I continue to expect another attempt at new all-time highs beyond the 12,200 level. The 200-hour simple moving average (SMA) is being probed this morning, as was the case last Thursday, but dips should continue to be regarded as buying opportunities rather than reasons to be more cautious.
The four-hour chart has seen a modest move lower in the stochastic indicator, but so long as 11,850 holds this index should continue its progress higher.
Dow momentum indicators still bullish
Price action in this index over the past week has tended towards the pattern of ‘two steps forward and one step back’, with today being no exception. Daily relative strength index and stochastic readings remain in a bullish frame, with no real resistance for this index until it hits the all-time high above 18,200.
The bounce off the rising October trendline is intact, with no reason to expect a change unless the 50-SMA at 17,820 is seriously tested.