DAX 30, CAC 40 & FTSE 100 Price Outlook:
DAX 30, CAC 40 & FTSE 100 Forecasts for the Week Ahead
European indices have had a rather modest week thus far, failing to exhibit the same signs of exuberance that some Nasdaq 100 constituents have shown. Similarly, the call for a bull market from Chinese President Xi Jinping sparked a parabolic climb in the Shanghai Composite another rally from which the DAX 30, CAC 40 and FTSE 100 were absent.
In the meantime, the three European equity markets have consolidated further, succumbing to relatively tepid price action. In the event of a reversal, however, the reserved nature of the European indices may serve to provide relative stability compared to the indices on the forefront of speculative appetite like the Nasdaq 100.
DAX 30 Technical Forecast
While investors dance between fundamental themes, price reveals nearby technical levels that may provide influence. The nearby 13,000 level is an area overhead that may provide resistance in the event of a bullish continuation higher as it coincides with the swing-high from early June.
DAX 30 Price Chart: 4 – Hour Time Frame (February 2020 – July 2020)
On the other hand, the rising trendline from March may provide a modicum of support alongside the Fibonacci level at 12,448. Together, they will look to keep the DAX above the recent lows near 12,000. A break beneath 12,000 could allow bears to attack the June swing low which, if broken, could allow losses to accelerate. In the meantime, follow @PeterHanksFX on Twitter for updates and analysis.
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CAC 40 Technical Forecast
The CAC 40 finds itself in a similar situation as it gyrates between two horizontal barriers. Resistance likely resides from 5,130 to 5,220 and support is in place around 4,650. Without a catalyst and hesitant to ride on the coat tails of the Nasdaq or Shanghai Composite, it seems the French equity index could be rangebound for the foreseeable future. Still, weeks of consolidation may insulate it from catastrophic losses in the event of a pullback as it has much less ground to lose relative to the March lows.
CAC 40 Price Chart: 4 – Hour Time Frame (February 2020 – July 2020)
FTSE 100 Technical Forecast
Moving across the Channel, FTSE 100 price action reveals the undeniably lackluster performance of the equity index. Having made little progress since May, the FTSE 100 is the laggard amongst the three indices covered in this article and is treading water slightly above an ascending trendline from April. Should it fail, bears may look to attack recent swing lows in the lead up to the Fibonacci level at 5,900.
FTSE 100 Price Chart: 4 – Hour Time Frame (March 2020 – July 2020)
To be sure, the series of higher lows is an encouraging sight from a technical perspective, but the lack of positive progress is concerning. All in all, it seems the FTSE 100 simply lacks the fundamental catalyst required to establish gains like that of the DAX 30 and CAC 40 – never mind the US indices.
–Written by Peter Hanks, Analyst for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX