Weekly market brief: 16 - 20 August 2021

FTSE 100 (#UKX)

The FTSE 100 ended the week with a rise of + 1.53%

For the week we expect a consolidation between 7,165 and 7,220 where a break of the two levels could then lead to strong moves.

Indicators

This week the FTSE, after a slight retracement, managed to break the resistance level and consolidate at the highs of mid-June.

MACD is positive confirming the bullish momentum of the index.

RSI is approaching the overbought zone and is recording a slight divergence with the price, especially if we analyze the time frame between mid-June and mid-August 2021.

The trend is strongly bullish but, looking at previous fluctuations, we can see a certain distance between the price and both 9 and 50 moving averages: the FTSE in particular tends to fluctuate near those averages and the current distance makes us thinking of a slight retracement in the short term.

A break of the two levels, 7,165 and 7,220, will lead to strong fluctuations in the short term: we remain in favor of a retracement to the 50MA before considering long positions.

Support for 7.165

Resistance at 7,220

FTSEMIB (#FTSEMIB)

The FTSEMIB had a positive week up + 2.00%

For the week ahead, we expect an initial retracement to 26.184

Indicators

The index managed to break through the psychological resistance of 26,000 and we believe it is now close to a slight retracement.

MACD is positive and above 0 noting the bullish momentum with an RSI that has reached the overbought zone.

Given the strong distance from both the 9 and 50 moving average, we expect a retracement in the short term at least till the support level: this theory is supported by how prices have moved in previous periods.

Support for 26.184

Resistance at 26,750

DAX (#DAX)

The DAX ended the week up + 1.26%

For the week ahead, we expect a retracement to 15,800

Indicators

The DAX managed to break through the strong resistance level and then stretch up to 16,000.

The MACD is positive confirming the bullish momentum of the index

The RSI is approaching the overbought zone and is in sharp divergence with the prices at the end of April.

Friday's candle is an "inverted hammer" which suggests a possible reversal to then continues the upward trend. In addition, the price is now quite far from both the 9 and 50 moving average and a retracement of it would be more than natural.

Support for 15,736

Resistance at 16,050

S&P500 (#SPX)

The S&P 500 had a week with a slight increase of + 0.83%

For the week ahead, we expect an initial retracement to 4,440

Indicators

The index reached a new high hitting the top in what appears to be a "rising wedge" formation.

MACD has been flat since the beginning of August, suggesting that there will certainly be strong fluctuations in the short term.

RSI is approaching the overbought zone and is in slight divergence with the prices of the beginning of July.

The trend remains strongly bullish but if the “rising wedge” formations is true, we could expect in the short term a strong bearish move at least up to 4.360-4.390.

More bullish scenario instead sees the S&P500 reaching the upper part of the Bollinger band before retracing to support levels: in this case, the target would be at 4,500.

Support at 4.390

Resistance at 4.468

NASDAQ 100 (#NDX)

The NASDAQ had a week up + 0.05%

For the coming week, the index could continue to move between 15,160 and 15,000: a break of one of the two levels could lead to strong fluctuations.

Indicators

The Nasdaq after testing a new high is now consolidating between 15,160 and 15,000.

MACD is losing momentum and the RSI is in sharp divergence with the prices of the beginning of July

At the moment we can see two scenarios: a bearish one that sees a divergence between MACD and RSI with price, the indicators are losing strength while the prices continue to rise. A more bullish scenario, on the other hand, sees a consolidation at current levels with a gradual increase in the 50MA which will then be able to support further bullish moves.

We are more in favour of a slight retracement at least to the 50MA.

Support at 14.827

Resistance at 15.226

DOW JONES (#DJI)

DOW JONES had a week up + 1.16%

We expect a retracement to 35,300 for the week ahead

Indicators

The index managed to break through the strong resistance area, however, ending with an indecision candle.

MACD regained strength, confirming the positive momentum of the index

RSI, despite a positive weekly performance, was essentially flat

The strong distance from the average at both 9 and 50 MA suggests a slight retracement in the short term

Support for 35,455

Resistance 35,610

OTB Global Investments

14 August 2021