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Technical Forecast for S&P 500, Dow, FTSE 100, DAX and Nikkei

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Technical Forecast for S&P 500, Dow, FTSE 100, DAX and Nikkei

S&P 500 Outlook: Index Fights Resistance, US Ground Boeing 737 Max Models.

DJIA: Dow Recovers from Fibonacci Support, Builds Rising Wedge.

– Are you looking for longer-term analysis of Equity prices? Check out our Quarterly Forecasts as part of the DailyFX Trading Guides.

It’s a week that started with fear following the tragedy in Ethiopia. A Boeing 737 Max crashed last weekend and Boeing stock gapped down aggressively to start the week. As one of the 30 constituents of the blue-chip index, this pushed the Dow Jones Industrial Average along with it. And despite a week of setbacks around that theme, with Canada announcing that they’re grounding all of these planes, followed by a similar statement from President Trump; the stock held support at a key area on the chart, assisting with recovery in the Dow as the S&P 500 moved-up for another test of fresh yearly highs.

For next week the big item on the calendar is Wednesday’s FOMC rate decision. There are minimal expectations for any rate hikes or future commitments to anything similar; but key will be what the bank says about continued balance sheet reduction and how the ultimate composition of the Fed’s balance sheet will look. This could create ripples through bond markets which could, in-turn, impact the global risk trade, pushing equities along with it.

S&P 500 Powers to Fresh 2019 High

The first week of March saw a pullback in the S&P 500 as the index failed to breakthrough a big area of resistance. This was from around the same zone that had produced resistance in the S&P in November and December, just ahead of a precipitous sell-off that saw the S&P trade all the way down to the 2334-area on the chart.

But since that low came-in, buyers have very much remained in-charge, pushing through January and February until the early-March retracement began to show. Last Friday saw stocks rally off of their Monthly lows, and that strength continued through this week to help produce a fresh 2019 high. This keeps the S&P 500 in a bullish position as one of the more attractive global indices available to traders. For next week the forecast will be set to bullish on the S&P 500.

Technical Forecast for the S&P 500: Bullish

S&P 500 Four-Hour Price Chart

sp 500 four hour price chart

Chart prepared by James Stanley

Looking for a fundamental perspective on equity? Check out the Weekly Equity Fundamental Forecast.

Dow Jones Lags Due to Boeing Trouble; Spends the Week Recovering

A similar backdrop had developed in the Dow in which a strong bullish theme through January and February took pause as a retracement showed in the first week of March. Prices in the Dow dipped down to the ‘s3’ support level looked at earlier last week, and that same support level helped to hold the lows for this week despite an outsized gap-lower in BA.

Since then, prices have continued to recover but the index remains a touch-less bullish than what was looked above in the S&P 500; and this can make for a more-challenging prospect of continuation given that price action remains subdued below the prior March high. The forecast on the Dow for next week will be set to neutral.

Technical forecast for the Dow for next week: Neutral

Dow Jones Daily Price Chart

Dow Jones DJIA Daily Price Chart

Chart prepared by James Stanley

FTSE 100 Recovers, Resistance Remains Near 7250

It was a strong finish to the week for the FTSE 100 as prices pushed up towards a re-test of 2019 highs around the 7250 level. That 7250 area was a prior area of support in the index that had last come into play in September of last year and so far this year that price has helped to cap the advance. If prices are able to push through this area on the chart, the door may soon open for bullish strategies. But, until then, the forecast will remain at neutral on the FTSE 100.

Technical Forecast for the FTSE 100 for Next Week: Neutral

FTSE 100 Daily Price Chart

FTSE 100 Daily Price Chart

Chart prepared by James Stanley

DAX Gains Capped at Key Fib – Room for More?

The German DAX rallied up to a fresh five-month-high this week; and this comes after an initial bearish move in response to last week’s news of the ECB triggering a fresh round of TLTRO’s. With a more-dovish backdrop in Europe, and continued recovery holding in the DAX through 2019, the door may be open for further gains. The forecast for next week will be set to bullish for the DAX.

Technical Forecast for the DAX for Next Week: Bullish

DAX Daily Price Chart

DAX 30 Daily Price Chart

Chart prepared by James Stanley

Nikkei in Middle of March Range; Subdued Below Fib Resistance

The Bank of Japan had a rather quiet rate decision this week and that was illustrated fairly-well in the Nikkei, which didn’t do much around that meeting. Prices in the index remain near the middle of the March range, and monthly resistance has held around the 50% marker of the Q4 sell-off. This keeps the index in a rather unattractive space for bullish strategies while bearish outlooks could be difficult to justify given the continuation of higher-lows that have held thus far in 2019. The outlook for next week will be set to neutral on the Nikkei.

Technical Outlook for the Nikkei: Neutral

Nikkei Daily Price Chart

Nikkei daily price chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q3 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers a plethora of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

— Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

Other Weekly Technical Forecast:

AUD Forecast – AUD/USD, GBP/AUD and AUD/JPY Technical Outlook Bearish

Crude Oil Forecast– Prices Touches New 2019 High As OPEC Supply Doubts Remain

British Pound Forecast – Charts Highlight Bullish GBP Bias

US Dollar Forecast – Dollar Reverses in Large Range, EURUSD Pressure Builds Towards Break

Gold Forecast – XAU/USD Rebound to Fizzle

Euro Forecast –Trend & Resistance Give Euro Weak Backdrop Heading into Next Week



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S&P 500, DAX Fundamental Forecast

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Equity Analysis and News

  • S&P 500 | Trade War Tensions Dictating Price Action
  • DAX | EU/US Trade Dispute is Delayed, Not Resolved

FTSE

Source: Thomson Reuters, DailyFX

S&P 500 | Trade War Tensions Dictating Price Action

The S&P 500 is on course to drop over 0.5% for the week as investor angst over US/China trade wars continues to weigh on risk appetite, most notably in the US benchmarks. However, while a mid-week bounce has seen losses pared slightly since the escalation with the S&P 500 now down 3% (Prev. -5.4%), the trade sensitive sectors have maintained their losses with the US Semiconductor Index down 10% (Prev. -11%). Consequently, focus will continue to remain trade wars.

SPX

Markets Pricing in Fed Rate Cuts

The Federal Reserve have continued to maintain the mantra that they will be on hold for the foreseeable future and that there is little reason to provide a cut. However, bonds markets have continued to price in Fed easing, with money markets fully priced for a rate reduction in December. Alongside this, the 3M/10yr US yield curve has continued to dip into inversion amid the rising trade war tensions. The upcoming week will see commentary from Fed Chair Powell, however, with markets pricing in a dovish Fed, the bar is high for Powell to match those dovish expectations as was evidenced in the post monetary policy decision speech on April 24th, in which the Chair noted that soft inflation was “transitory”.

FED

Source: DailyFX, Thomson Reuters

DAX | EU/US Trade Dispute is Delayed, Not Resolved

A firm week for the DAX, which recorded gains of over 1%, among the major factors behind this had stemmed from source reports stating that the Trump Administration were to delay imposing auto-tariffs on EU imports for an additional 6-months (full story), which in turn saw the European auto names surge. The decision to delay could largely be attributed to the fact that US/China tensions have escalated. However, this is merely a delay and not a resolution. Noteworthy calendar events: ECB Draghi & Praet (Thurs), Eurozone PMIs (Thur).

DAX Price Chart: Daily Time Frame (Jan 2019May 2019)

DAX

RESOURCES FOR FOREX & CFD TRADERS

Whether you are a new or experienced trader, we have several resources available to help you; indicator 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 Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

Looking for a technical perspective on Equities? Check out the Weekly Equity Technical Forecast



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Euro Weakness to Remain the Theme

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EURUSD Technical Highlights:

  • Euro looks headed towards the April low or worse
  • 4-hr chart has a developing structure to pay attention to

Check out the DailyFX Trading Guides page for intermediate-term forecasts, educational content aimed all experience levels, and more.

Euro looks headed towards the April low or worse

To be clear, trading EURUSD lately hasn’t been an easy endeavor as low volatility conditions continue to be a headwind for traders. We’ve seen some movement in other majors (GBPUSD in particular) but not in the most widely traded pair. That will eventually change, but until it does we have to continue to take what is presented to us and be patient with set-ups.

With that said, the general trading bias remains the same as it has for months – lower. Trend and price action continue to be supportive of this bias. A run on the April low at 11109 or worse looks to be in store sometime in the coming sessions, but the path could be a little shaky.

Dialing in a bit closer to the 4-hr time-frame, a channel is becoming visible even if it isn’t perfect, with candlestick wicks clouding the picture. A small bounce from the lower parallel may make for the best scenario, as the lower parallel’s importance is further cemented and a nearby low is created in the process.

A bounce and subsequent breakdown could offer a solid structure (see 4-hr chart) for would-be shorts from both a probability and risk/reward standpoint. Selling right here at support puts one at risk of a bounce with good stop placement difficult to determine.

A bounce that carries the euro beyond 11225 will give pause to sellers and bring into play the area around 12265 (recent highs/trend-lines) and possibly become an even more attractive spot to short. The bottom line is that the Euro looks headed lower, but it may pay to sit tight and wait for a better look before entering new positions. If currently in a short from higher levels, then one could use the aforementioned highs and trend-lines to manage risk accordingly.

Check out the IG Client Sentiment page to find out how changes in positioning in major markets could signal the next price move.

EURUSD Daily Chart (April low, 11000s could be soon)

EURUSD

EURUSD 4-hr Chart (Channel/Bear-flag)

EURUSD

Helpful Resources for Forex Traders

Whether you are a new or experienced trader, we have several resources available to help you; indicator 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 Paul Robinson, Market Analyst

You can follow Paul on Twitter at@PaulRobinsonFX

Looking for a fundamental perspective on The Euro ? Check out the Weekly EUR Fundamental Forecast



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Euro Braces for Volatility Ahead of EU Elections, ECB Minutes

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EURO FUNDAMENTAL FORECAST: BEARISH

  • Europe and the Euro brace for European parliamentary elections
  • The ECB and Fed meeting minutes may mean additional volatility
  • European economic data, OECD outlook publication add to risks

See our free guide to learn how to use economic news in your trading strategy!

The Euro may be in for its most tumultuous week year-to-date as the Fed and ECB prepare to release their respective meeting minutes right before the EU holds the most consequential European-wide vote in its history. Volatility may be further enhanced after the OECD publishes its latest projections for growth and as key Eurozone economic data is released throughout the week.

On May 21, the multinational organization will publish its economic growth forecasts with expectations that the report will highlight weakness in global demand. The US-China trade war has disrupted financial markets and destabilized global growth prospects. EU-US relations are also not particularly comforting after the two global players waged an economic war against each other with a possible continuation this year.

Euro area economic data will also be released throughout the week. German GDP and Eurozone CPI will likely be the most heavily eyed pieces of data, though their impact may be overshadowed by higher-level event risk. Broadly speaking, economic data out of Europe has been tending to underperform relative to expectations and has forced the ECB to implement new liquidity provisions as a way to boost local growth.

EUR

The following day, the Fed will be releasing its FOMC meeting minutes from the most recent policy meeting. Fed monetary policy has not only impacted the US Dollar but has also roiled global financial markets because of the implication a higher-priced USD has on international economic activity. According to the Bank of International Settlements, 80 percent of all global transactions are conducted in the US Dollar.

And finally, on May 23, Europeans will cast their ballot and express their joy – or more likely, discontent –with the European Union. Preliminary polls are showing eurosceptic parties may gain as much as one-third of all seats in the European parliament. This in itself could have devastating consequences for the Euro and could undermine the stability in European sovereign bond markets.

Spanish, Italian, Greek, Portuguese 10-Year Bond Yields Spike on Italy’s Political Turmoil

EUR

On the same day, the European central bank will be publishing its minutes from the last policy meeting. Market participants are likely expecting dovish undertones as the continent continues to struggle in bringing about sustained growth and inflation. Brexit and the European elections may only add greater political risk and cloud an already-uncertain outlook as monetary authorities attempt to steer in unchartered territory.

FX TRADING RESOURCES

— Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

Looking for a technical perspective on the Euro? Check out the Weekly EUR Technical Forecast



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