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Andreas Zanin
Analysis, Education | March 14, 2022

DAX30 & DOW JONES: weekly analysis 14 – 18 MAR

Market movers

The good news of the Ukraine-Russia negotiation gave only a small sigh of relief to the stock markets. All of it lasted too short, so any bullish intent was followed by new bearish pressures.

The news coming out of Ukraine put pressure and volatility on oil and the rest of the commodities. Gold has reached its all-time high, only to retreat sharply; oil has reached its highest level in 14 years, only to return sharply to the downside. The ECB gave “Dowish” indications, so the euro recovered from its previous lows, making it the best currency of the week.

Next week investors will continue to observe developments in the conflict in Ukraine with particular attention. From a macro-economic point of view, eyes will be on the FED, which will announce a symbolic increase in rates on Wednesday. The BOE and BOJ meetings will also be followed. The retail sales in the U.S. will be the most important data of the week. Pay attention to the quarterly technical deadlines and the time zone: Sunday is daylight saving time in the U.S., so the U.S. opening will be anticipated by one hour until Sunday, March 27, when daylight saving time will be activated in Europe.

Analysis of the week and scenarios for DAX and Dow Jones

Also this week the close of last Friday tells us that the indices are oriented to continuous ups and downs, as the underlying technical picture has not changed and still remains bearish.

It is true that the markets are already discounting the end of the war between Russia and Ukraine, but it is also true that the short pressure as well as the volatility is still high, so it will be the holding of certain key levels that will indicate the price movements until the FED meeting on Wednesday.

The S&P500 index spiked this week in the 4,320-4,330 area, without reaching our resistance 4,371-4,391; the weekly close saw a return of the prices to the 4,200 area.

Resistance confirmed in 4,371-4,391 area. Above 4,424, prices will attack 4,470 area. However, only above 4,505-4,543 prices will be able to offer a weekly bullish reversal.

Below all the mentioned levels, prices may reverse at any time. Intermediate resistance 4550-4576. Above 4,596-4,613 the weekly trend will turn bullish again; if broken the next targets will be 4,717 and 4,780.

The current price position is to not miss the lows of February 24 at all costs. The new supports are placed at 4,170 and 4,159 area, where we could see new rises in case of pullback. Intermediate resistances are placed at 4,262 and 4,291. We will watch 4,170 and 4,113, because if we lose them violently we will have a quick closure of the gap in the 4,000 points area.

How to move? Hard to say, we are in the week of the FED and the quarterly technical expirations.  It is therefore good to follow the technical levels indicated.

DE40 – The German index made an extraordinary recovery this week from the early March lows, more than 13%. The excesses to the downside saw full-bodied re-coverings and position closures.

Twice the Dax attacked the key resistance 13,924: in the first case it was held only in one session; in the second one we saw an algorithmic spike that made the prices turn heavily downwards and close the week in 13,552 area.

The resistance at 13,924 is again confirmed for this week. New resistances at 14,096 and 14,160. Resistances at 14,307 and 14,547 area remain in force. The latter is the level that the Dax needs to recover in order to have lasting rises. A recovery of 13,600 can stop the current bearish force in the short term, but without the recovery of 14,547 prices will always find new downward pressure, especially on the indicated resistances.

Prices have confirmed the resistance placed between 14,810 and 14,899. A recovery of the zone of 15,261 first and 15,380 then, may offer a bullish cue up to the resistance 15,570, where we will check the possibility of a new attack on the weekly resistance 15,665.

Intermediate resistance at 15,810 and new bullish strength above 15,944. Finally, a break of resistance 16,079-16,136, will offer the possibility to see key resistance 16,230, from which to target the 16,300-16,500 area.

Intermediate resistances at 13,614 and 13,831. If the Dax should continue to fall, the intermediate supports will be in the 13,442 area, under which it can push hard and look for the following support in the 13,200 area. From here the price has no obstacles until 12,955 and can also rebound strongly.

The weekly support is in the area 12,900-12,860. Key support in the area 12,700, area that has shown its strength with the rebound of last week and that is vital for a possible accumulation phase.  Confirmed the 12,500-12,435 area as annual support. Extensions to 12,155 and 11,766.

If by next Friday, prices remain above 13,924, we will see a possibility of bullish reversal; below 13,200, however, the weekly trend may push strongly downwards.

US30 – The Dow Jones index continues on ups and downs as the Ukrainian crisis continues to hold sway.

After confirming the support in the 32,308 area, the index tried to break our resistance in the 33,348-33,526 area, only to turn sharply downwards and close in the 32,959 area.

Confirmed the resistance in 33,550 area; weekly resistance in 33750 area. Intermediate resistance in 32,765 area.  Confirmed the key resistance in 33,898-34,055 area. Below 34,055 it will be necessary to verify if the prices will maintain or not the levels indicated above, because in case of new sell offs they will be broken vertically.

The Dow Jones above 34,055 can retest 34,442-34,565, from where strong resistances will start to the 34930 area. These areas should be monitored carefully, because here we can see new heavy sell-offs.

A weekly positioning of the prices above 35,599-35,963 will offer a new bullish directionality; 35,277 and 35,614 are the levels on which the 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 36,529 and that will keep this level, will offer the possibility to see the 37,000 area if the prices will strongly break the last resistance placed in the 36,786 area. Above 36,236 we maintain the possibility of further bullish volumetric thrusts.

Intermediate support in 32,813 area and remains key the weekly support in 32,636-32,566 area. Losing this level could lead to new heavy declines.

Supports confirmed 32,308-32,215 32,137.  Only below it we can see stronger bearish pressures, with possible structural trend changes. First targets in area 31,973 and 31,567.

 

IMPORTANT NOTE: The market is still under the pressure of a strong volatility. For the intraday trading is optimal, but for the multiday we are not yet in an easy situation to manage. Keep an eye on the supports, resistances and the weekly close, because a reversal can come at any time. The FED and the technical expirations can be the perfect excuse to create a trend movement, preferably bullish. Pay attention to the spikes that can appear on the screens at any time and without macroeconomic reasons.

Also this week it is wise to take note of Monday’s openings and Friday’s closings, in order to have confirmation or denial of the current trend. Avoid overtrading and pay attention to the volatility impressed by HFT.  Mark any gaps that may appear during the week, with particular attention to those of Monday.

Good trading!

 

Research provided by Giancarlo Prisco

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