DAX 30, FTSE 100 and CAC 40 Fighting Off Resistance as Momentum Builds
It’s likely to be a quiet morning session ahead for currency markets as investors indulge in the common pre-NFP lull. There is a lot riding on the data out this afternoon as a lot of emphasis has been put on jobs data to determine the path of monetary policy in the next few months, with markets hoping to see a strong reading above 800k to start pointing the finger at the Fed, once again telling it to adapt to the times and do something to curve rising price pressures and a hot jobs market.
So we shift our attention to the equity space this morning in an attempt to capture some kind of move. The session started out pretty positive, with all European majors advancing nicely in the green, but momentum has changed and we’re now left at opening levels with a false sense of direction.
Some of these indices had been stuck in a pretty tight range up until this week and had managed to build some gains in Wednesday and Thursday’s sessions, but the European open seems to have left them slightly in the dark.
DAX 30 Levels
The DAX 30 was finally able to break above 15,710 on Thursday after weeks of trying and finding strong resistance. The key challenge ahead will be breaking above 15,800 which is a new all-time high for the German index and the previous two attempts were quickly reversed. Momentum has built up nicely over the last few weeks as the pullback to wards 15,050 offered some space for new buyers to come in and take over. The recent range-trade between 15,685 and 15,430 has also helped buyers gather as the index was able to retest support just above 15,400, growing bullish confidence along the way.
DAX 30 Daily chart
FTSE 100 Levels
The FTSE 100 hasn’t been so lucky in its breakout attempt as it remains stuck around the same area it did a month ago. Once the index hits the 7,120 area it sees recurring fluctuations on either side but is unable to get a meaningful break higher, with strong resistance following at 7,170. Unlike with the DAX, momentum seems to be coming off slightly after a the recent push higher left the stochastic in the overbought area and the MACD unable to build further. The RSI has still got a way to go before it is overbought but it has also started to come off slightly which puts further pressure on the FTSE’s short-term outlook. For further gains to build the index would ideally need to be closing on the 7,200 mark in the next few sessions otherwise we may see momentum running fully out of steam, which would leave the 7,000 mark as an indicator of further selling pressure.
FTSE 100 Daily Chart
CAC 40 Levels
The CAC 40 continues to shine and is inching closer to its record high by the day. The French index has had 14 out the last 15 daily candlesticks in the green, which has helped paint a pretty clear picture of higher lows. Today’s session is the first one to be tilting towards a negative close out of the last 8 days so we may be seeing some struggle to break higher after such a good run. This could mean a small break in the bullish run to allow momentum to gather further and so the CAC may be crossing the 6,800 mark in the next few sessions, or it could be the start of a further pullback towards 6,600, although I do see this as less likely as things stand at the moment.
CAC 40 Daily Chart
--- Written by Daniela Sabin Hathorn, Market Analyst
Follow Daniela on Twitter @HathornSabin
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.