S: Support R: Resistance
FTSE 100 (#UKX)
The FTSE 100 ended the week up + 0.61%
For the week we expect a retracement to at least 7,220
Positive week for the British index which consolidated above the strong resistance area, now support, at 7,220. The breaking of this level is a further confirmation of the strong bullish trend that we believe will continue at least until the end of the year.
At the same time, before continuing to rise, we expect the index to retrace in the short term at least to the previous breakout level: even better scenario, it would see a decline to the 50MA.
Looking at the indicators, MACD appears to be about to cross to the downside followed by a diverging RSI with the price. In addition, the RSI failed to break through the strong resistance of 65, a sign of a slight loss of vigor.
Finally, we can hypothesize the formation of a rising wedge and this week's fluctuations could confirm this.
Support for 7,220
Resistance at 7,330
The FTSEMIB had a week up + 2.82%
For the week ahead, we could see a retracement to 27,300.
The index managed to break through the strong resistance, now support, of 26,750 and for the last few weeks it has moved between the upper part of the Bollinger band and the 9MA.
MACD reached the level of 400 which, according to previous swings, represented a strong resistance even in situations of strong upside. RSI has reached the overbought area.
The trend is strongly bullish but at the moment, the risk / return ratio is more in favor of a slight decline.
Combining the strong upward extension along with the MACD and RSI indicators, we are in favor of an initial retracement at least to the 9MA. If it is exceeded, we would look at 26,900 as the next target.
Support for 26,750
Resistance at 26,870
The DAX ended the week up + 1.66%
For the week ahead, we expect a slight decline to 15,900
The German index managed to break through the strong resistance level, now support, at 15,980: a sign that the upward trend is strongly in control and we believe it will continue for the last two months of the year.
At the same time, the breakout occurred with a "doji" candle and an "inverted hammer" which could signal a slight loss of vigor: not exactly the type of candles we would like to see on a strong break, despite the increase in volumes.
MACD is well positioned on the upside and shows no sign of strong trend reversals for the moment. It is more the RSI to signal an overbought situation: looking at past swings in March and April 2021, slight retracements might follow.
To conclude, we believe that the DAX will soon continue to rise also given the recent break with good volumes: an increase that will, in our opinion, see a slight retracement in order to bring the price to optimal buy levels.
Support for 15.980
Resistance at 16,092