FTSE, DAX Outlook: UK, EU stocks Back Down, All Eyes on the Fed

DAX, FTSE Talking Points:

• DAX40 recovery muted as bulls fail to gain traction above 14,000
• FTSE 100 finds support above key Fibonacci levels
• Fed rate decision and geopolitical risks continue to drive sentiment

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DAX, FTSE Fall to Support as Equities Remain Strained

After a strong rebound from the March 7th low (12,438), the German DAX managed to regain confidence before facing a wall of resistance at the key psychological level of 14,000.

With the UK and EU announcing additional sanctions against Russia in an effort to end the war in the Ukraine, the current level of resistance has continued to hold firm, pushing price action back into a zone of confluency, formed by the key Fibonacci levels of the February – March move. Meanwhile, the FTSE currently remains above the 7,000 as bulls remain determined to drive prices back above the current resistance level at 7,200.

As discussed in yesterday’s article, geopolitical risks have continued to drive sentiment, resulting in a shift in risk sentiment which has weighed to riskier assets. However, with investors now pricing in the ongoing war in the Ukraine and rising inflation, any surprises from the Fed or a change in the economic backdrop will assist in the catalyzation of price action for the remainder of the week.

DAX (Germany 40) Technical Analysis:

At the time of writing, DAX prices are currently trading between the 13,687 and 14,079, Fibonacci levels which remain as short-term support and resistance for the short-term move. As prices remain well below the 50 and 200 day MA, the MACD remains below the zero line, a potential indication that the downtrend currently remains intact, at least for now.

With prices currently trading between the 10 and 20-day MA (moving average) the CCI (commodity channel index) has retreated from oversold territory while Fibonacci levels continue to provide additional layers of support and resistance.

DAX (Germany 40) Daily Chart

Chart prepared by Tammy Da Costa using TradingView

DAX40 Levels to Watch

Support:

• S1: 13,800
• S2:13,687 (38.2% Fib of Feb – March move)
• S3: 13,500

Resistance:

• R1: 14,172 (20-day MA)
• R2: 14,396 (23.6% Fib of the 2020 – 2021 move)
• R3: 14,470 (61.8% Fib of Feb – March move)

FTSE 100 Technical Analysis

For the UK equity market, the FTSE 100 has found support above the 7,000 handle, ending the day slightly lower. As bulls strive to break the 7,200 barrier, price action remains below the 50 and 200-day MA (moving averages) with the MACD below the zero line.

FTSE 100 Daily Chart

Support:

• S1: 7000
• S2: 6,864 (Fib level)
• S3: 6,755

Resistance:

• R1: 7,225 (50-day MA)
• R2: 7,300 (Key psych level)
• R3: 7,439 (200-day MA)

--- Written by Tammy Da Costa, Analyst for DailyFX.com

Contact and follow Tammy on Twitter: @Tams707