Trading levels for the UK election
We’ve a busy week ahead with the UK general election, the ECB meeting and former FBI chief James Comey’s testimony. With these events liable to move the markets, what are the key levels for major forex and indices?
EUR/USD is certainly overbought but there’s no sell signal yet. The ECB meeting on Thursday is obviously the main focus. The first support is at 1.1245/40 but a move lower risks a slide to better support at 1.1190/80.
A bounce from here is likely on the first test this week. A break below 1.1150 would however test the best support for this week at 1.1120/10.
The high so far is at 1.1285 but the main challenge for bulls today is obviously the 1.1299 November high (from US election day). This is not however strong resistance, despite the overbought conditions. We’ll need to break this level for further bullish confirmation.
A break above 1.1300 is a buy signal confirmation targeting the September high at 1.1326 and the August high at 1.1360/65.
If GBP/USD holds minor support at 1.2870/80 this re-targets first resistance at 1.2930/40. Above 1.2950 look for 1.2975/79, before a test of six-week trendline resistance and the May high at 1.3042/47. A break higher tests 10-month trendline resistance at 1.3090/95. A break above 1.3125 targets 1.3170/80 and 1.3230/40.
The first support is at 1.2875/70 but below here risks a slide to support at 1.2835/25. We bottomed exactly here last week but a break below 1.2800 today would risk a re-test of 1.2770/60 (the May low).
However, further losses target 1.2710/05 and Fibonacci support at 1.2690/85. Just be aware of the 100-day moving average support at 1.2620/10 and the six-month trendline at 1.2580.
S&P and DAX
E-mini S&P could trade sideways to ease overbought conditions. But if it holds below minor resistance at 2432/31 this re-tests the first support at 2426/25. With the short-term outlook, however, turning slightly more negative we could continue lower to strong support at 2418/16.
This is the best chance of a low for the day but long positions need stops below 2410. On further losses look for strong support at 2404/02.
We have the new all-time high at 2439.75. If we continue higher look for 2442/44 but we are severely overbought. And the doji ‘inside day’ on Monday should question bulls’ convictions in severely overbought conditions. So the upside is likely to be more limited today. If we do break higher again look for 2457/59.
The DAX has held good support at 12670/660 almost perfectly as I write on Wednesday morning, but we have seen no bounce. Therefore a break below 12630 would signal further weakness to 12605/600 and last week’s low at 12563.
We could, however, fall as far as strong support at 12535/525 before a bounce. Long positions need stops below the May low at 12491/487.
If we hold support at 12670/660 this targets 12700/705 and then 12745, perhaps as far as the 12790/799 level. If we continue higher obviously look for a test of the new all-time high of 12879.50. On a break higher this week we look for 12940/950.
We should struggle here initially but further gains in the bull trend target 13000/010 and 13055/060, perhaps as far as 13115/125.
FTSE and Dow
If the FTSE holds below 7535/30 this keeps the outlook more negative for a re-test of support at 7510/05. I’m not sure I would try longs here today as I’m worried about the downside. But be ready to sell a break below 7490 to target 7460/55.
Watch for a bounce from here in short-term oversold conditions. Long positions need stops below 7435. Just be aware that further losses target 7418/13 and then 7380/70.
The first resistance is at 7530/35 but a move above 7540 could re-test the 7586/89 all-time high. Just as important is eight-month trendline resistance now at 7595/99 in severely overbought conditions.
Bulls will need a sustained break above 7610, with a two-day close above at the very least, for further bullish confirmation targeting 7635/40 and eventually 7690/7700.
E-mini Dow Jones has first support at 21120/110. We do need to ease overbought conditions so if we continue lower look for a buying opportunity at 21055/045, with stops below 20990. A break lower, however, targets 20940/930 before an excellent buying opportunity at 20870/860.
Bulls need to hold prices above 21160 for a chance to re-test the all-time high at 21226. Further gains this week target 21305/315 but it is likely to remain a slow crawl higher. If we continue higher into the end of the week look for 21390/21410.
Technical Analyst & Trader
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