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DAX 30 & FTSE 100 Wedge break looks imminent and needs catalyst

Price outlook for the DAX30 and FTSE100:

DAX 30 & FTSE 100 Wedge break looks imminent and needs catalyst

The DAX30 and FTSE100 have been working on similar technology patterns over the past few weeks. Both indices Ascending wedge formation. The rising wedge pattern is generally considered a bearish technical formation, and when a textbook example occurs, it ends with a downward breakout through the lower bound. Therefore, the presence of such formations in the European index may indicate a potential decline in the coming days.

DAX30 Technical Forecast

Formations are usually considered ominous, but there are reasons for encouragement in the DAX30 price chart. Most notably, the DAX 30 recently set a series of record highs. This suggests that the final wedge break may act as a healthy integration before the next rise, rather than a reversal of the rally break.

DAX 30 Price Chart: 4-Time Frame (March 2021 – June 2021)

A bearish breakdown shows that the pre-resistance of the DAX 30 test is around the 15,400 mark, and a breach by secondary support could lead to a rangebound price action on the German stock index.

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FTSE100 Technical Forecast

The FTSE 100 is in a similar position, albeit with a much longer time frame that may suggest deeper retracement in the event of a bear. Unlike the DAX 30, FTSE has not yet established a record high that highlights the relative weakness of the index in this pattern, or in the post-pandemic era.

Thanks to the bull, the FTSE 100 enjoys nearby support in the form of Fibonacci levels and a 50-day simple moving average. Both technical levels conveniently match the lower limit of rising wedges traded just north of 7,000. The breakdown may indicate that the FTSE 100 is seeking initial support around the 6,800 mark.

FTSE 100 Price Chart: Daily Timeframe (December 2019 – June 2021)

FTSE100 Price Chart

Both the DAX30 and FTSE100 trade within ominous technical patterns, but textbook resolution for these patterns requires a final breakdown. This is an event that requires catalysts and beliefs to provide follow-through.

With that in mind, given the current market conditions, it’s likely that one or both indexes will post minor interruptions in need rather than explosive volatility events. Volume and volatility are almost exhausted, and the release of economic data seems to have lost the ability to provoke market activity. Nevertheless, the pattern needs to be watched, as a sudden resurgence of volatility can accelerate price behavior.In the meantime, follow me @PeterHanksFX On Twitter for updates and analysis.

-Written by Peter Hanks, Strategist For DailyFX.com

Contact Peter on Twitter to follow @PeterHanksFX



DAX 30 & FTSE 100 Wedge break looks imminent and needs catalyst

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