DAX 30, FTSE 100, CAC 40 Price Outlook:
- The DAX 30 trades narrowly beneath prior highs, an encouraging sign for the medium-term outlook
- By comparison, the FTSE 100 is in the midst of a downward channel, running the risk of further losses
- The CAC 40 remains trapped within a horizontal range but nears topside resistance
DAX 30, FTSE 100, CAC 40 Forecasts for the Week Ahead
European indices have been on a rollercoaster ride in the last few weeks as they experience whiplash trying to keep up with the leading Nasdaq 100 technology stocks. At the forefront of risk appetite, these stocks have shown they can set the tone for equity performance globally and, as a result, abrupt losses in the FANGMAN group can undermine the DAX 30, FTSE 100 and CAC 40. Further still, the European indices lack comparable exposure to technology, so their gains – when established – often lag that of the US indices.
DAX 30 Price Chart: 4 – Hour Time Frame (June 2020 – September 2020)
Nevertheless, the outlook for the DAX 30 is an encouraging one. A methodical churn higher since June has seen the DAX post a series of higher-highs and a recent peak in early September could hint another leg higher is in the cards. With that in mind, the technical landscape for the DAX 30 remains constructive, barring a break beneath the ascending trendline from mid-June which might require a reevaluation.
( 16:09 GMT )
Recommended by Peter Hanks
DailyFX Education Summit: Trade Your Market – Day 2, Indices
FTSE 100 Forecast
In the case of the FTSE 100, price action has been less friendly. Prolonged Brexit uncertainty has seen the equity index lag its European counterparts and a descending channel has been created in the wake of political gridlock. Consequently, the FTSE 100 stands on precarious footing as weeks of gradual losses have hampered any attempt at a bullish break out. Without a firm resolution to the Brexit debacle, a continuation lower is a growing threat.
FTSE 100 Price Chart: 4 – Hour Time Frame (May 2020 – September 2020)
CAC 40 Forecast
In a spurious alignment with geography, the French CAC 40 index stands somewhere in the middle of the DAX 30 and FTSE 100. While CAC 40 gains have trailed that of the German index and losses have been less severe than the United Kingdom’s equity index, the goldilocks scenario has culminated in a positively indecisive price chart. Such indecision can be readily observed in the lack of progress over the last three months and the firm upper and lower horizontal boundaries that ensnare the CAC 40.
CAC 40 Price Chart: 4 – Hour Time Frame (May 2020 – September 2020)
Suffice it to say, it seems the French equity index stands stuck in mud which could provide opportunity for range trading techniques. On the other hand, traders in search of a break out trade will likely have to wait sometime longer, although a trip to the topside of the range could make bullish breaks more likely. In the meantime, follow @PeterHanksFX on Twitter for updates and analysis.
–Written by Peter Hanks, Strategist for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX