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Technical Update - DAX, FTSE 100 and 250 ripe for correction

Technical Update - DAX, FTSE 100 and 250 ripe for correction

Equities 3 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

Summary:  DAX, FTSE 100 and FTSE 250 seem ripe for a correction. Earnings and Macro numbers this week could be the ignition

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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.

      

Source all charts and data: Saxo Group
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.

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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