The weekly market brief

💡14 - 18 December 2020

📈 FTSE 100: 6,529.18 (- 0.44%)

📈 DAX: 13,630.51 (+3.10%)

📈 S&P 500: 3,709.41 (+0.66%)

📈 Nasdaq 100: 12,738.18 (+2.20%)

📈 Dow Jones: 30,179.05 ( - 0.19%)

The percentage increases are on a weekly basis

FTSE 100 (#UKX)

The FTSE on a weekly time frame closed slightly in the red by -0.44%: a mixture of Brexit negotiations and strong moves to the upside for the Oil, left the British index almost unchanged compared to last week.

On Monday 14th the FTSE felt till the 6,848 level to then bounced back: the move was very similar to December 3rd. The resistance level at 6,606 still remain a strong barrier to overcome, the index was indeed rejected three times during the week.

For the coming week, we confirm the level of resistance at 6,606 and support at 6,462.

From a technical perspective, we see a MACD pointing lower together with a RSI leaving the overbought territory.

Taking into account the current scenario, we want to highlight two possible scenarios:

• A bullish one where the Index is forming an ascending triangle and it will soon break the resistance level at 6,606. The upward trendline can be seen by linking the low of 3 December with the lows of this week. This setup would also imply a negative outcome in Brexit negotiations causing a fall in the Pound and momentum to the upside for the #FTSE.

• A bearish one, where the index is indeed loosing momentum. This theory is also supported by the bearish candles with whom the FTSE closed the last 2 trading days, together with MACD and RSI both pointing to the downside. In addition, a spike in Covid cases and a further set of restrictions can act as a negative catalyst for the Index. A move to the downside, could also be supported by a strong Pound and a positive outcome to the Brexit gridlock.

To conclude, we do believe that the Index is losing the strength necessary for strong moves to the upside: we might expect for the near future a retest of the support at 6,462.

DAX (#DAX)

The German Index had a very strong positive week, on a weekly basis the #DAX is up by +3.10%: the level touched of 13,784 is the same as March pre-Covid crisis.

Once resistance is broken becomes support: therefore, for the coming week we see the support at 13,452 and resistance at 13,784

From a technical perspective, the MACD is pretty strong compared to last week and RSI is approaching the overbought territory.

On Friday the Index reached the 13,784 level and reversed back forming an alarming Shooting start candle: this particular candle, together with strong bearish volumes, may represent a reversal signal.

Therefore, we suggest our readers to proceed with cautions as the #DAX may test support levels in the near future: taking into account also the further round of restrictions across Europe and spike in Covid cases.

For the coming week, we might see a retest of support level at 13,452

S&P 500 (#SPX)

The #SPX, once again, follow the pattern has been putting in place for the last weeks: bearish moves on Monday and gradually recover for the rest of the week.

The #SPX managed to re-enter the upward channel and closed above the 9MA for the week: the current levels are support at 3,700 and resistance at 3,800.

From a technical perspective, we see the #SPX gradually losing its strength and keep brushing the lower end of the channel. The MACD has been almost flat together with a RSI that is still showing divergence with the current price.

Unless very positive news from Congress on stimulus package, we might expect for the near future the #SPX to consolidate between the 3,700 and the 3,582 levels before considering sharp moves in either directions.

NASDAQ 100 (#NDX)

The Nasdaq had a positive week, gaining +2.20%. Most important it bounced back from the 12,255 making it a very strong area of support: a spike in Covid cases and further restrictions across Western countries definitely acted as positive catalyst for the tech index.

Considering the hammer candle that closed the week, we might see a slight continuation in the coming days: however, by looking at the strong divergence between RSI and Price we are more in favour to a sideways movements till the end of the year and eventually retest the 12,255 level.

For the coming week we see support at 12,650 and resistance at 13,014.

Dow Jones (#DJI)

The #DJI had an interesting week, by testing on Monday the support level to then slightly recover for the rest of the week.

It is out of doubts, that the Dow has been moving sideways since the beginning of December: we confirm the support level at 29,880 and resistance at 30,327.

From a technical perspective, the #DJI is approaching the lower end of the upward channel, together with a MACD that is sloping down and a strong divergence between RSI and Price: we believe that for the near future the #DJI might re-touch the support level before considering moves in either directions.

For the coming week we see support at 29,880 and resistance at 30,335.

OTB Global Investments

London, 20 December 2020