Last week was very eventful with peace negotiations between Ukrainian and Russian delegations that have made slight steps forward. However, uncertainty still remains high especially after the attack probably carried out by Ukrainian helicopters on a crude oil deposit in Belgorod in Russia.
The other theme of the week was inflationary pressures, which were confirmed to be strong and growing in both Europe and the United States. The central banks (ECB and FED) will have to discuss again whether they should change their strategies to a more hawkish tone in order to deal with high inflation.
Next week the Eurogroup/Ecofin meetings and the publication of the minutes of the last FED meeting will be of particular interest.
Last week the stock markets reached a nice rise at the setup of March 28, and then reversed with some strength until Friday’s close. The markets should continue to show a bullish direction until mid-May; if that happens, we will have a clearer idea of whether or not we have reached the yearly low.
The S&P500 index made a strong rise this week, breaking the monthly resistance 4596-4613 and then it retraced on Friday until it touched the 4500 area. The retracement is legitimate, as we touched a monthly resistance.
Intermediate resistances at 4658 and 4687. The weekly closing above 4613 guarantees the monthly bullish trend; next targets are 4717 and 4780. New resistances placed at 4540 and 4571-4590 area. If prices do not stay above 4540 this week, we could see a major correction.
The current price position remains to confirm 4464-4490 as key support for the week. 4440-4426 knocked down, can lead to fast declines.
Support in the 4371 area confirmed. The 4293-4331 are acting as intermediate support. We will watch 4182-4215 and 4113, because if we lose them violently we will have a quick closure of the gap placed in the 4000 points area.
How to move? The trend is bullish, but the downside risks are always present. For now we will consider every pullback a useful phase for new purchases. However, any decreasing highs on a daily basis can lead to new reversals.
DE40 – The German index broke this week the resistance 14547 with great strength, after a false break, reaching the top of the resistance 14810-899, and then closing the week in the 14400 points area.
It has an important meaning that the Dax stopped exactly in the area 14810-899. If the German index will not be able to break these levels quickly, the risk is to see a new very long sideways phase; or a new violent descent.
The new weekly resistance to break down is located in the 14842 area. Intermediate resistances are in the 14725-659 and 14592 areas.
A recovery of the 15261 area first and then 15380, can offer a bullish cue up to the resistance 15570, where we will verify the possibility of a new attack on the weekly resistance 15665. 15261 is easily reached this week.
Intermediate resistance at 15810 and new bullish strength above 15944. Finally, a break of resistance 16079-16136, will offer a chance to see key resistance 16230, from which to target the 16300-16500 area.
The resistance 13924 remains the weekly support; from this level important purchases have accumulated up to the key support placed in 13690 area. New support at 14305 and confirmed 14290-239 and 14200-141. Particularly important this last area, under which a fast decline can start with first target the support 13924.
If the Dax should fall below 13690, the intermediate supports will be in the area 13555 and 13442, under which it can push hard and go to look for the following support in the area 13200. From here the price has no obstacles until 12955 and here it can also rebound strongly.
The monthly support we place in the area 12900-12860. Key support in the area 12700, area that has shown its strength with the rebound of last week and that is vital for a possible accumulation phase. Confirmed the 12500-435 area as annual support. Extensions to 12155 and 11766.
If by next Friday the prices will remain above 14141, we will see a possibility of bullish continuation; below 13690, instead, the weekly trend can push strongly downwards.
US30 – The Dow Jones knocked down this week the key resistance 34930, reaching our intermediate bullish target 35277, then retraced and touched the weekly support 34568 on Friday’s close.
New weekly resistance placed in 35128 area. In general, the whole area from 35170 to 35015 offers considerable resistance and if it is not taken down quickly, prices may go sideways at the very least.
A weekly positioning of prices above 35599-963 (reachable this week) will offer a new bullish directionality; 35277 and 35614 are the levels on which prices can restart to the upside or push down again. This requires us to constantly monitor prices at these levels.
A movement that will cross the 36529 and that will keep this level, will offer the possibility to see the 37000 area if the prices will strongly break the last resistance placed in the 36786 area. Above 36236 we maintain the possibility of further bullish volumetric thrusts.
Supports confirmed at 34565-458 area. Above 34565 and up to 34921 a hard support area is maintained. Weekly support in 34303 area and confirmed 33886. Up to 34303 prices have numerous obstacles that can be broken down only in case of sell off. Broken this level we can witness some downward acceleration. Possible extensions to 33726 from where we start to have strong volumetric areas, with peaks at 33521 and 33378. All excellent areas to search for long entries. Below 33378 we could quickly attack 33265- 32956, key support from where this rebound started.
Support is confirmed at 32813 area and the key support remains at 32636-566 area. Losing this level might lead to new heavy declines.
Other supports at 32308-215 137. Only below it we can see stronger bearish pressures, with possible structural trend changes. First targets in area 31973 and 31567.
IMPORTANT NOTE: The market has made a violent reversal, so it is advisable to buy every pullback, especially those that will touch the key supports. We might still see daily closings on the downside, but without a violent and directional fall, the bullish trend can continue. April is statistically a bullish month.
Also this week it is wise to take note of Monday’s open and Friday’s close, in order to confirm or deny the current trend. Avoid overtrading and keep an eye on the volatility impressed by HFT. Mark any gaps that may appear during the week, with particular attention to those of Monday.
Research provided by Giancarlo Prisco
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