Dow Jones, DAX 30, FTSE 100, CAC 40 Technical Forecasts:
- The Dow Jones sits atop its recent range, but it must weather a long holiday weekend before it can see a breakout materialize
- Meanwhile, DAX 30 and CAC 40 look to be well underway on their journey higher as the FTSE 100 lags due to fundamental concerns
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Dow Jones, DAX 30, FTSE 100, CAC 40 Technical Forecasts for the Week Ahead
The major equity indices staged an admirable recovery last week as risk appetite crept back into markets. With the Dow Jones trading near the top of its August range, the Industrial Average will attempt to follow its German and French counterparts which look to be farther along in their recoveries. Meanwhile, the FTSE 100 will attempt to regain its footing after stumbling amid Brexit concerns. Here are the levels to watch in the week ahead.
Dow Jones Technical Forecast
Outlook: Neutral
After enjoying a modest recovery rally last week, all-time highs are once again within grasp for the Dow Jones Industrial Average. That said, a series of technical barriers stand between it and a fresh record. First and foremost, the DJIA will have to post a verifiable close above the top of its August range, which stands roughly at 26,444. While Friday saw the Index drive above the level briefly, many traders will want to see a daily close above the line before extending their gaze higher. Nevertheless, the higher high tagged at 26,547 is encouraging.
Dow Jones Price Chart: 4 – Hour Time Frame (June – August) (Chart 1)
Underneath, the Dow Jones should look to enjoy substantial support in the 25,280 to 25,080 area. A plethora of technical levels reside in the zone – each possessing various degrees of technical influences. In aggregate, they will look to stall an attempt lower. If broken, the DJIA may look for subsequent support at the 24,600-level marked by June’s low.
DAX 30 Technical Forecast
Outlook: Bullish
Despite worrisome fundamentals, the DAX 30 broke out of its own range last week, closing comfortably above the upper-bound. In the week ahead, the German Index will look to the previous boundary around 11,826 for support. Similarly, the nearby 200-day simple moving average around 11,920 could provide a modicum of buoyancy.
DAX 30 Price Chart: 4 – Hour Time Frame (June – August) (Chart 2)
Immediate resistance to the topside is sparse at first glance, but it could be argued prior lows from June will prove troublesome. That said, it is far more likely resistance around 12,210 will be more burdensome for bulls, evidenced by the level’s influence on price throughout June, July and August. Either way, a break above the recent range is an encouraging development that should open the door for a continuation higher.
CAC 40 Technical Forecast
Outlook: Bullish
Like the DAX, Friday saw the CAC 40 surge to post a fresh high for the week - but nearby barriers are a little more apparent. Posed by the topside of a channel from early August, followed by the ascending trendline derived from December and June lows, the CAC 40 will have to battle with resistance early on if it is to continue higher. Should both sloping trendlines fall, horizontal resistance around 5,550 could look to rebuke a continuation.
CAC 40 Price Chart: 4 - Hour Time Frame (June – August) (Chart 3)
Thankfully for bulls, the French Index also enjoys nearby support. Previous highs around 5,446 will offer the first level of buoyance, followed by the Fibonacci retracement at 5,393. If both prove insufficient, the ascending trendline from August’s lows will look to rescue CAC’s ascent.
FTSE 100 Technical Forecast
Outlook: Neutral
Moving to the FTSE 100, the British Index failed to etch fresh highs on Friday alongside the DAX 30 and CAC 40. Consequently, it possesses perhaps the least encouraging backdrop for a bullish continuation. While the latter half of the week offered an attempt higher, a series of lower lows throughout August could signal that further consolidation is needed before the FTSE can climb higher.
FTSE 100 Price Chart: 4 - Hour Time Frame (June – August) (Chart 4)
Thus, resistance is marked by the August swing high around 7,300, followed by the 200-day simple moving average slightly higher. The Fibonacci level around 7,365 may also look to stall bullish price action. Conversely, the FTSE 100 will hope to enjoy support at the nearby Fibonacci level around 7,200. Subsequent support becomes opaquer but could be offered at each of the swing lows in August at 7,075, 7,020 and 6,990 respectively. For further technical and fundamental analysis on the various equity markets, follow @PeterHanksFX on Twitter.
--Written by Peter Hanks, Junior Analyst for DailyFX.com
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