Coronavirus Crash: FTSE 100, DAX 30 & FTSE MIB Selling Overdone?
- 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.
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.
FTSE 100 Price Chart: Daily Time Frame
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.
Jan 31st Low
Dec 3rd low
FTSE MIB Price Chart: Daily Time Frame
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.
DAX Price Chart: Daily Time Frame
--- Written by Justin McQueen, Market Analyst
Follow Justin on Twitter @JMcQueenFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.