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DAX and FTSE Fragile as Market Sentiment Remains Cautious

DAX and FTSE Fragile as Market Sentiment Remains Cautious

Zain Vawda, Analyst
  • DAX 40: Indecisive as we hover around key 13000 level.
  • FTSE 100: Ekes out marginal gains despite fragile sentiment.

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DAX 40: Indecisive as we hover around the key 13000 level.

The DAX fluctuated between losses and gains in European trade as sentiment remains fragile. Investors remain cautious following the US CPI print, however, it does look unlikely that equities will push much lower ahead of the Federal Reserve meeting next week.

On the energy front, the Eurozone began preparations for mass blackouts expected to occur during the winter months. The European Commission put a proposal forward calling on Governments to assist in cutting usage by 10% as well as 5% during peak hours. The German Regulator meanwhile issued a warning that the likelihood of gas shortages this winter remains. Gas contracts were higher for a third straight day as interventions by the European Commission seem to be having a limited effect at the moment.

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Pressure remains on the index as policymakers have the unenviable task of battling soaring inflation, declining currency prices and a slowdown in economic activity. To bring this point into perspective Barclays bank has stated that they expect a recession in the first half of 2023 with the bank forecasting a contraction of more than 1% for the Eurozone economy.

DAX 40 Daily Chart – September 15, 2022

Source: TradingView

From a technical perspective, last week’s bullish close was followed up by early week gains before we saw sentiment shift which happened to line up with a host of technical confluences. We saw a selloff of around 480-odd points which coincided with the 50% fib level, trendline as well as the 100-SMA. The daily candle closed as a doji and above the 13000 key level once again highlighting the indecision in markets at the minute. Better value is found on smaller timeframes as long-term bias is difficult to predict at this stage.

Key intraday levels that are worth watching:

Support Areas

  • 13050
  • 12912
  • 12785

Resistance Areas

  • 13275
  • 13475
  • 13550

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FTSE 100: Ekes out marginal gains despite fragile sentiment.

The blue-chip index eked out marginal gains in early trade before declining to trade near flat as the US session approaches. Markets are showing signs of steadying following Tuesday’s sell-off, however positive retail figures from the US later today could spur on another risk-off rally.

In corporate news, the Shell (SHEL) group announced that its current CEO will step down at the end of the year. The current CEO Ben van Beurden who has served at the company for close to four decades will be succeeded by the firm’s head of gas and renewables, Wael Sawan. The company’s share price rose 1.5% for the session. Rolls Royce PLC (RR) led the gains with a gain of 5% in the session while the Scottish Mortgage Investment Trust (SMT) saw its shares up as much as 4% mainly down to its stakes in a number of Nasdaq-listed firms.

Banking shares may be set to enjoy a boost as next week’s Bank of England meeting draws closer as higher rates are expected to result in increased earnings. With this in mind we had lenders Lloyds Banking Group (LLOY) and NatWest (NWG) shares improve 0.7p to 47.1p and 4.4p to 274.1p respectively.

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FTSE 100 Daily Chart – September 15, 2022

Source:TradingView

The FTSE remains under pressure following Tuesday’s huge bearish engulfing close on the daily timeframe keeping the index within its range. The range between 7600 and 7000 has been strong, with choppy price action to boot. We have seen a higher low followed by a lower high as price action gives mixed signals on the higher timeframes. We trade back below the 20,50 and 100-SMA which is providing strong resistance just above current prices, with strong support areas resting below the 7300 area. Traders may find better value in looking at lower timeframes as the daily timeframe remain choppy.

Trading Ranges with Fibonacci Retracements

Key intraday levels that are worth watching:

Support Areas

  • 7274
  • 7231
  • 7170

Resistance Areas

  • 7333
  • 7379
  • 7446
FTSE 100 Bullish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -8% 11% -3%
Weekly 0% 4% 1%
What does it mean for price action?
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Whether you are a new or experienced trader, we have several resources available to help you; indicators for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

Written by: Zain Vawda, Market Writer for DailyFX.com

Contact and follow Zain on Twitter: @zvawda

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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