Quiet Week For Equities
Global equities benchmarks are seeing a quieter start to the week with most indices trading around the weekly opening price on Tuesday. Markets are seeing lighter volumes now as we head into the middle of the summer months and the recent rally seen across equities markets has stalled for now. Some US Dollar buying on Tuesday has also further paused the rally though, in light of the current sell off, the buying looks more likely to be a pause in the decline rather than the start of a bullish reversal for USD.
News of fresh travel restrictions between some EU countries has also created headwinds for risk sentiment this week. The UK has moved to impose quarantine demand on all travellers returning from Spain following a fresh outbreak of the virus there. Other countries are now following suit including France and Germany with fears that holidaymakers over the summer will lead to a second wave of the virus being brought back to the UK. Fears of a second wave of the virus continue to skew USD sentiment as both the infection rate and the death toll continue to rise there.
A quiet data week means there is unlikley to be much volatility in equities markets this week, with movement likely to remain tied to USD flows. However, traders should keep an eye on US/China related headlines with any further escalation in tensions there likley to impact risk sentiment. COVID-19 headlines will also be a key risk driver and news of any further travel restrictions will pose downside risks for equities traders.
Technical Views
DAX (Bullish above 11861.85)
From a technical viewpoint. While the DAX remains within the bullish channel for now, downside risks are building. Momentum studies showed strong bearish divergence on the last leg higher and price is now retesting the channel low. A break below here will open the way for a test of deeper support at the 11861.85 level.
S&P500 ( Bullish above 3235)
From a technical viewpoint. The S&P500 continues to be supported by the rising trend line from year to date lows and is now fighting to break back above the 3235 level. If price breaks below the rising trend line, the next support level to watch is the 3115.75 level where the 50dma is situated also.
FTSE (Bullish above 5922.4)
From a technical viewpoint. The FTSE has broken below the rising channel low and is now trading back under the 50dma. While below here, the next level to monitor is the 5922.4 support which, if broken will open the way for a test of the 5626 level next.
NIKKEI (Bullish above 21758.9)
From a technical viewpoint. The Nikkei has broken back below the rising channel low but for now, has found support at a test of the 50dma. While above here, the near-term outlook remains bullish. However, downside risks are building here and a break back below the 50dma will open a test of the 21758.9 level next.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!