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DAX 30, FTSE 100 Technical Outlook: Pricing in a Global Recession

DAX 30, FTSE 100 Technical Outlook: Pricing in a Global Recession

2020-03-21 10:00:00
Justin McQueen, Analyst
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DAX 30 & FTSE 100 Analysis and News

  • DAX | Risks Skewed to the Downside
  • FTSE 100 | Another Look Below 5000

A further deterioration in risk sentiment as equity markets reprice a global recession. The spread of the coronavirus continues to keep equities on the backfoot and with many countries going into lockdown, volatility will remain elevated.

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DAX 30 | Risks Skewed to the Downside

Another sizeable weekly drop in the DAX with much of the downside exacerbated upon the break below the 2019 low (10173). Despite a modest reprieve in the index at the back end of the week, we expect bounces to prove short-lived and this see risks remain firmly skewed to the downside. As such, eyes are for a retest of the 2016 low situated at 8696, where failure to hold could see losses extend to 8350 (October 2014 low). Keep in mind that with volatility remaining elevated, the DAX will be subject to wild swings.

Germany 30 BULLISH
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -8% 0% -3%
Weekly -26% 26% 1%
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DAX 30 Price Chart: Weekly Time Frame

Dax 30 Weekly Price Chart

Chart by IG

FTSE 100 | Another Look Below 5000

The Bank of England delivered yet another emergency rate cut to a fresh record low of 0.1%, while also increasing its QE program in order to combat the coronavirus. While the announced prompted a modest lift in UK assets, typically an emergency rate cut from the BoE does not bode well for the FTSE 100, as such, we see risks of another move sub 5000 with London set to go into shutdown.

FTSE 100 Performance

Source: FTSE 100 Performance from Bank of England Rate Cuts

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FTSE 100 Price Chart: Weekly Time Frame

FTSE 100 Weekly Price Chart

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--- Written by Justin McQueen, Market Analyst

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