Key technical support levels to watch out for on European indices

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The ongoing Russian attack on Ukraine has pushed European indices drastically lower but will this week’s lows hold?

Source: Bloomberg

 Axel Rudolph | Market Analyst, London | Publication date: Friday 25 February 2022 

FTSE 100 finds support around the 200-day simple moving average (SMA)

Russia’s invasion of Ukraine pushed the FTSE 100 to two-month lows at 7177 before a recovery set in.

Source: ProRealTime

 

The FTSE 100’s composition, being commodity and especially oil heavy, with the likes of BP and Shell outperforming, meant that it fell significantly less than other European indices such as the French CAC 40 or German DAX 40, for example. The index is thus benefitting from the rise in commodity prices on the back of the Russian invasion.

The FTSE 100 nonetheless dropped sharply to the 200-day simple moving average (SMA) at 7223 which offered support, just as it did in September, November and December.

The breached three-month uptrend line at 7380 is back within reach but the next higher 55-day SMA and yesterday’s high at 7466 would need to be exceeded, for the technical picture to become bullish again.

Source: ProRealTime

 

Only then would an attempt to break through the one-month downtrend line at 7536 become possible, a rise above which could lead to new highs for the year being made.

For now a series of lower highs and lower lows can be made out on the daily chart, however, meaning that a downtrend is entrenched and that the odds favour further losses.

A slip through this week’s low at 7177 would push the 20 December low at 7100 to the fore as well as the psychological 7000 mark and the November low at 6972.

DAX drops to pre-pandemic high on full-scale Russian invasion of Ukraine

The DAX 40 fell out of bed as Russia mounted a full-scale invasion of Ukraine, slicing through major long-term support and dropping by as much as -5% to the pre-pandemic February 2020 high and 50% retracement of the October 2020-to-November 2021 advance at 13,831 to 13,810 which offered support.

Source: ProRealTime

 

The fact that the 14,917 to 14,840 key support zone which has held since May 2021 has given way, has put the bears firmly in charge.

Short-term a recovery towards this now resistance area, because of inverse polarity, on the back of relatively stronger and recovering US and Asian stock markets may unfold, but Wednesday’s high at 14,903 would need to be overcome for the current bearish picture to be invalidated.

Source: ProRealTime

 

As long as that is not the case, the 2022 downtrend remains very much intact with a possible fall through this week’s low at 13,795 leading to the January 2020 high and February 2021 low at 13,644 to 13,641 being targeted.

CAC 40 tumbles after Russian military assault on Ukraine

Despite ongoing diplomacy between French president Macron, alongside several other Western leaders, and president Putin, the invasion of Ukraine by Russia has not been averted, leading to a sharp sell-off in the CAC 40 to 6432.

This low was made marginally above significant support which can be spotted between the September and October lows at 6421 to 6384.

Source: ProRealTime

 

So far today the index has managed to heave itself back up above the 2020 to 2022 uptrend line at 6520 with the late December and January troughs at 6703 to 6733 representing short-term resistance ahead of the 200-day simple moving average (SMA) at 6790.

For a bullish reversal to gain traction, Wednesday’s high at 6905 would need to be bettered, however. While this is not the case, the bears remain in control.

Source: ProRealTime

 

Were support at 6421 to 6384 to falter, the pre-pandemic February 2020 high at 6124 would be back in the spotlight.