Dow Jones, Nasdaq 100, DAX 30 Price Outlooks:
- While the Nasdaq 100 has outperformed the Dow Jones, both enjoy encouraging technical backdrops
- The DAX 30 will look to hold above nearby technical support and search for further gains
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Dow Jones Technical Forecast
Outlook: Bullish
The Dow Jones closed the month of May with an encouraging performance, largely built on the back of accommodative fundamentals. As a result, the Industrial Average has developed a technical picture that appears largely constructive to further gains in the month ahead – assuming the fundamental forces driving the market remain somewhat similar.
Dow Jones Price Chart: 4 – Hour Time Frame (February – May)
With that in mind, the Dow may look to continue its ascent within the rising channel originating in April. While price briefly broke below in mid-May, a subsequent retest a week later would suggest the level still maintains some technical merit. Thus, bears may have to negotiate two technical levels if they are to post a committed attempt lower. First at the nearby Fibonacci level around 25,222 and second at the ascending lower bound near 24,625.
On the other hand, a continuation higher may be hampered by the channel’s upper bound, which appears at least somewhat responsible for the selloff in the middle of last week. Secondary resistance may reside around 26,000 but I suspect the larger hurdle resides at the next Fibonacci level, around 26,883, that also coincides with two halted rebound attempts in March.
Nasdaq 100 Technical Forecast
Outlook: Bullish
Elsewhere, the Nasdaq 100 may look to continue its upward trajectory. As the de facto leader of equity indices, the tech-heavy index has returned to within just 3% of its all-time high. In the midst of a series of higher-highs and higher lows, it is hard to argue against the Nasdaq from a technical standpoint.
Seemingly contained by boundaries of the ascending channel in which it trades, the medium-term trend seems higher still at this stage. That said, the Nasdaq may encounter some resistance as it approaches all-time highs at 9,752, but apart from the peak, topside barriers are sparse.
DAX 30 Forecast
Outlook: Neutral
By comparison, the German DAX 30 looks to have a relatively quiet week ahead. While the index will certainly track broader risk trends, foreseeable risks at the time being are in the form of scheduled data releases. German inflation, growth, consumer confidence and retail sales data are just some of the big ticket prints to look for next week, alongside a series of reports expected from other Eurozone members - all of which can be viewed on our Economic Calendar.
DAX 30 Price Chart: 4 – Hour Time Frame (February – May)
That being said, even poor results from the upcoming data may not be enough to immediately reverse the tide for the DAX 30 after German and French politicians came to a surprise agreement last week which boosted their respective indices. The announcement was a notable step toward unity in the single-currency Euro project and the event should provide a sense of stability in the weeks ahead.
--Written by Peter Hanks, Analyst for DailyFX.com
