S&P 500, Dow Jones, DAX 30 & FTSE 100 Price Outlooks:
S&P 500 Technical Forecast
The major equity markets suffered a serious reversal last Thursday as risk appetite evaporated and price was sent sharply lower. In turn, the S&P 500 was sent spiraling toward 3,000 as it moved off recent highs. Now the index stands on the threshold of another leg lower if 3,000 is successfully broken. Marking a key psychological level, the line has influenced price in the past and is one of the few major levels that will look to ward off further losses. Secondary support may reside near the Fibonacci level at 2,933.
S&P 500 Price Chart: 4 – Hour Time Frame (February – June)
While the fundamental catalyst behind the move is somewhat unclear, the damage dealt to the technical patterns and price formation is perhaps the most worrisome takeaway going forward. After posting a series of higher-highs for weeks, the recent retracement is a significant blow to the formation and considerably undermines the technical outlook in my opinion. Therefore, my technical bias for the week ahead is bearish.
Dow Jones Technical Forecast
Elsewhere, the Dow Jones will aim to hold above confluent support around 25,200. The area is marked by a Fibonacci level and the lower bound of an ascending channel, one which has guided price higher since early April. Together, they will look to buoy price if selling should continue. If broken, subsequent support may reside at the next Fibonacci level, around 24,000.
Dow Jones Price Chart: 4 – Hour Time Frame (February – June)
( 15:06 GMT )
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DAX 30 Technical Forecast
Shifting to the DAX 30, price action reveals a similar story. Retreating from recent heights, the DAX 30 broke beneath an area of confluent support around 12,447 and may now attack possible support near 11,592. Encouragingly, the DAX enjoyed a slight bounce on Friday that might suggest bearish appetite is waning. Either way, the DAX 30 enjoys a degree of separation from the nearest area of potential support, so the technical picture looks slightly more constructive than that of the Dow Jones and S&P 500.
DAX 30 Price Chart: 4 – Hour Time Frame (February – June)
FTSE 100 Technical Forecast
Looking to the FTSE 100, it is easy to see the damage dealt to the ascending channel that had helped carry price higher since March. As a result, it can be argued the formation is weaker than it was before and may not only provide less lift if reclaimed, but also act as a possible area of resistance on an attempt higher.
FTSE 100 Price Chart: 4 – Hour Time Frame (March – June)
Thus, it appears the FTSE 100 is at risk of another leg lower, which could see it probe the Fibonacci level around 5,880. Like the DAX 30, however, the FTSE enjoys a somewhat sturdier position than the Dow Jones and S&P 500 with room to give before a major technical level might come under fire. Further still, a renewed recovery effort could see the channel formation reclaimed which would be an encouraging development and bring resistance at 6,200 back into view. In the meantime, follow @PeterHanksFX on Twitter for updates and analysis.
–Written by Peter Hanks, Analyst for DailyFX.com