DAX 30, FTSE 100, CAC 40 Price Outlook:
- The DAX 30 blew through the 200-day simple moving average as it aims lower
- The FTSE 100 may look to a nearby Fibonacci level for support should declines continue
- A longstanding trendline should provide buoyancy for the CAC 40 with secondary support nearby
- Will the Stock Market Crash in 2020?
DAX 30, FTSE 100, CAC 40 Forecasts for the Week Ahead
Stocks gapped lower to start the week after an alarming uptick in the number of reported coronavirus cases around the globe. The initial shock saw various levels of technical support evaporate alongside gains for the year as selling pressure rolled over into the second half of the week. Now comfortably beneath recent highs, equities have seemingly begun to catch their breath, but continued bearishness may ensue given the vast uncertainty around the economic impact of the viral outbreak.
DAX 30 Technical Forecast
Selling pressure has seen the DAX 30 slip beneath its 200-day simple moving average just four days after it was establishing new records. The abrupt reversal speaks to the fervor with which the move was established as the German equity index looks to support for assistance in the days ahead. A possible first line of defense will reside around the 12,460 level which coincides with prior swing highs and helped to buoy price early Wednesday.
DAX 30 Price Chart: 4 – Hour Time Frame (February 2017 – February 2020)
Subsequent support may exist nearby along the rising trendline originating from the December 2018 lows. If another bearish break lower occurs and the initial areas are easily discarded, a third potential zone of support resides around 11,900. A break beneath the level would place the DAX in correction territory and likely leave it vulnerable to further declines.
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FTSE 100 Technical Forecast
In the case of the FTSE, the current rout worked to obliterate a gradual melt higher from the equity index – a trend we had been watching for months. Consequently, the series of higher-lows has been broken and initial support was pierced without much consideration. Now, the index is left grasping for a lifeline as it trades around the August 2019 swing low.
FTSE 100 Price Chart: Daily Time Frame (May 2018 – February 2020)
With few nearby levels to assist, the FTSE 100 will look to the Fibonacci line around 6,833 to help stem further losses. Should it fall, the January 2019 swing low around 6,730 may offer a morsel of support but it seems unlikely the line could singlehandedly stall further declines given the extremes the market is witnessing.
CAC 40 Technical Forecast
Similar price action can be observed on the CAC 40 which briefly broke beneath a crucial trendline dating back to December 2018. While price has reclaimed the line at the time of this article’s publication, the depth test below has proven the line is not impenetrable. With that in mind, secondary support around 5,525 may be required if sellers return.
CAC 40 Price Chart: Daily Time Frame (April 2018 – February 2020)
If broken, another horizontal line around 5,400 will look to help in stalling declines. That being said, commentary from the FDA suggests a global outbreak of coronavirus is likely which could dent sentiment further and halt global supply chains.
–Written by Peter Hanks, Junior Analyst for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX