Nasdaq 100, Dow Jones, DAX 30, FTSE 100 Price Outlooks:
- The Nasdaq 100 has been an underperformer as of late and appears weak technically
- The Dow Jones and DAX 30 will look to hold above their respective ascending trendlines
- The FTSE 100 remains ensnared in a descending channel that has seen losses mount
Nasdaq 100 Technical Forecast
Major technology stocks like Apple and Tesla continued to undermine the Nasdaq 100 last week, causing the tech-heavy index to lead losses amongst the major indices. As a result, technical formations have been undone and bears may look to extend recent declines. In the case of the Nasdaq, weakness has allowed for the development of a series of lower-lows and higher-highs, a formation that could see the index extend lower still.
Nasdaq 100 Price Chart: 1 – Hour Time Frame (July 2020 – September 2020)
To that end, the series of successively lower-lows and highs has begun etching out a descending channel that could guide the index lower in the week ahead. Further still, resistance to the topside appears plentiful with an ascending trendline from mid-April around 11,540 and a Fibonacci level near 11,670. These topside barriers will look to keep the Nasdaq contained should risk appetite revive, while support at prior lows around 10,940 may provide a hurdle to cross before bears can drive further south.
Despite glimmers of resurgent risk appetite, technology stocks continue to appear weak and the technical erosion that has occurred due to the initial reversal may now be a driving force behind any continuation lower. To be sure, the Nasdaq has been at the forefront of risk appetite for months so losses at the top may trickle into other sectors and work to undermine more diversified indices like the S&P 500 and Dow Jones.
( 15:09 GMT )
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Weekly Stock Market Outlook
Dow Jones Technical Forecast
Recent price action has placed the Dow Jones in a rather precarious position, holding narrowly above an ascending trendline that has helped guide price higher since mid-June. The level marks an initial area of likely support for the Industrial Average and a break beneath could see the Dow probe subsequent support near 27,000. On the topside, an attempted recovery rally may have to negotiate possible resistance around the September peak at 29,195 before it can continue higher.
Dow Jones Price Chart: 4 – Hour Time Frame (June 2020 – September 2020)
DAX 30 Technical Forecast
The DAX 30 underwent volatility of its own last week, but little progress was made from a technical perspective. With the recent swing-high established in early September, the DAX 30 appears well positioned to continue its slow churn higher despite weakness elsewhere. With that in mind, the technical landscape for the DAX 30 remains constructive barring a break beneath the ascending trendline from mid-June which would require a reevaluation.
DAX 30 Price Chart: 4 – Hour Time Frame (May 2020 – September 2020)
FTSE 100 Technical Forecast
In contrast to the DAX 30, the FTSE 100 has established a series of lower lows and lower highs, effectively creating a descending channel. The channel, if respected, could help guide the FTSE 100 lower in the days ahead. While intraday volatility will likely arise and could lead to gains, the FTSE 100 might remain vulnerable until the technical formation can be broken. Thus, traders should keep an eye on the upper bound around 6,175.
FTSE 100 Price Chart: 4 – Hour Time Frame (May 2020 – September 2020)
Conversely, renewed bearishness could send the FTSE spiraling to the lower end of the channel where potential support resides at 5,900 and 5,780. A break beneath both levels could open the door to further losses and see the FTSE approach tertiary support near the Fibonacci level in close proximity to 5,700. In the meantime, follow @PeterHanksFX on Twitter for updates and analysis.
( 16:09 GMT )
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–Written by Peter Hanks, Strategist for DailyFX.com