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Coronavirus Crash: FTSE 100, DAX 30 & FTSE MIB Selling Overdone?

Coronavirus Crash: FTSE 100, DAX 30 & FTSE MIB Selling Overdone?

2020-02-24 16:17:00
Justin McQueen, Analyst
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DAX 30, FTSE 100, FTSE MIB Price Analysis & News

  • Coronavirus Spread Sparks Market Panic
  • DAX 30, FTSE 100 & FTSE MIB Drop
  • Selling Overdone? Key Support May Provide Respite

Risk sentiment has taken a turn for the worse with global equities coming under heavy selling pressure to begin the week amid a lack of signs to suggest that the spread of coronavirus can be contained. As such, there has become an increasing focus on the spread of coronavirus outside of China, where South Korea has seen a surge in the number of cases to over 800 (according to Yonhap), while Italy has reported over 150 cases.

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Equities Technical Analysis

FTSE 100: As the concerns over coronavirus continues to dominate market sentiment, the FTSE 100 has tripped below rising trendline support, which in turn seen the index extend a move towards critical support at 7116 (50% Fib). That said, we see the 50% Fib holding for now amid today’s somewhat excessive price action. However, a firm break below would indeed leave the FTSE 100 vulnerable to a drop towards 7000.

Support

Resistance

7116

50% Fib

7261

38.2% Fib

7000

-

7374

200DMA

6971

61.8% Fib

7400

-

How to Trade FTSE 100

FTSE 100 Price Chart: Daily Time Frame

FTSE 100 Selling on Coronavirus

Source: IG Charts

FTSE MIB: With the number of cases picking up notably across Italy in light of their large sample of swab checks (4000), the FTSE MIB has come under significant selling, shedding as much as 5.8% and nearing correction territory. That said, given the size of the move in recent sessions, the pullback may be somewhat overdone.

Support

Resistance

23008

Jan 31st Low

23632

23.6% Fib

22693

200DMA

23750

100DMA

22600

Dec 3rd low

24000

-

FTSE MIB Price Chart: Daily Time Frame

FTSE MIB Crashes as Italian Coronavirus Spreads

DAX: The DAX has also not been spared by the market panic with the index dropping as much as 4%. With the index breaking below the rising trendline, the index has since tested notable support at 13000. Failure to hold and the index may see a move towards 12700-800 zone.

Germany 30 BULLISH
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -4% 79% 43%
Weekly -7% 42% 23%
What does it mean for price action?
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Support

Resistance

13000

-

13400

Trendline Resistance

12967

23.6% Fib

13500

-

12757

200DMA

13601

2018 Peak

DAX Price Chart: Daily Time Frame

Coronavirus Crash: FTSE 100, DAX 30 & FTSE MIB Selling Overdone?

IG Charts

--- Written by Justin McQueen, Market Analyst

Follow Justin on Twitter @JMcQueenFX

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