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Technical Update - DAX, FTSE 100 and 250 ripe for correction
Kim Cramer Larsson
Technical Analyst, Saxo Bank Group
Summary: DAX, FTSE 100 and FTSE 250 seem ripe for a correction. Earnings and Macro numbers this week could be the ignition
Today's Saxo Market Call podcast.
Today's Market Quick Take from the Saxo Strategy Team
Today's Market Quick Take from the Saxo Strategy Team
DAX 40 reached 1.618 projection at 15,222 and then some. Now having been range bound since the peak, the Index seems to be ripe for a correction as indicated by the divergence on RSI. A correction that could take DAX down to 0.382 retracement at 14,705 but a dip down to around 14,356 is not unlikely¨.
For DAX to regain power and extend its (already stretched) uptrend to strong resistance at around 15,619 a close above 15,270 is needed.
FTSE 100 is similar to most European markets, range bound. Closing just a few p above 7,740 for 8 consecutive days! After sellers have tried to push the Index to 7,700 but failed.
Divergence on RSI indicates a correction is in the cards but as long as FSE 100 can stay above 7,700 it does not seem to unfold.
However. A correction down to 7,600 possibly 7,500 could be seen. But it requires a close below 7,740.
If FTSE instead climbs higher and close above 7,875 a new all-time is likely.
The medium-term trend is up. FTSE 100 is trading in a steep rising channel – weekly chart – and there is no divergence on RSI indicating higher levels in FTSE next couple of months.
For FTSE 100 to reverse the bullish trend a close below 7,300 is needed.
Divergence on RSI indicates a correction is in the cards but as long as FSE 100 can stay above 7,700 it does not seem to unfold.
However. A correction down to 7,600 possibly 7,500 could be seen. But it requires a close below 7,740.
If FTSE instead climbs higher and close above 7,875 a new all-time is likely.
The medium-term trend is up. FTSE 100 is trading in a steep rising channel – weekly chart – and there is no divergence on RSI indicating higher levels in FTSE next couple of months.
For FTSE 100 to reverse the bullish trend a close below 7,300 is needed.
FTSE 250 seems to be struggling sustaining its uptrend currently failing to make a new higher high above 20,082 short-term. A close above is needed for further upside to resistance area at around 20,395-20,547.
If FTSE 250 closes below 19,574 a correction down to around 19.086 should be expected. 55,200 and 100 Moving Average will provide support.
RSI divergence explained: When instrument price is making a new high/low but RSI values are not making new high/low at the same time. That is a sign of imbalance in the market and an weakening of the uptrend/downtrend. Divergence or imbalance in the market can go on for quite some time but not forever. It is an indication of an exhaustion of the trend
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