FTSE 100, DAX and Dow give back some of their recent gains in the wake of strong US CPI data
Indices are still strong, although some weakness in the aftermath of US CPI has been seen.
FTSE 100 retraces from two-year high following increased US inflationary pressure
Yesterday the FTSE 100 rose to a near two-year high at 7566, made slightly above the February 2020 high at 7549, before giving back some of its recent gains following mounting inflationary forces in the US economy. A further retracement lower thus cannot be ruled out today.
Were a rise above 7566 to be witnessed, however, the July 2019 high at 7622 and the pre-pandemic December 2019 and January 2020 highs at 7680/7690 would be back in the picture.
Immediate upside pressure should be maintained while the index stays above the 7500 mark. Below it sit the two-month support line at 7477 and the December high at 7461.
DAX looks vulnerable following candlestick Doji pattern
The DAX index began this week on a positive footing but failed to reach minor resistance seen between the early November high and 19 November low at 16089 to 16091. This, coupled with the fact that a daily candlestick Doji pattern was formed yesterday, may lead to another down leg.
In Japanese, "doji" means blunder or mistake, referring to the rarity of an open and close price being exactly the same or close to one another. It denotes indecision and a slip through yesterday’s low of the pattern at 15953 would be short-term bearish and target the early December high at 15872, and also the two-month support line at 15846.
Only a rise above yesterday’s high at 16080 would invalidate the candlestick pattern and put the November and early January highs at 16288 to 16299 back on the map.
Dow slipping back towards support in the wake of strong US CPI data
The Dow is likely to drop back to the 36129 12 December high today, a fall through which could lead to the 11 November low and 25 November high at 35954 to 35919 being in focus.
Further down stronger support can be made out between the two-month support line, 55-day simple moving average (SMA) and the current January low at 35820 to 35643.
Only a rise above yesterday’s high at 36456 would negate the current short-term bearish bias and engage the 36569 November peak. Above it sits the December high at 36685 and also the current January peak at 36955.
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