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DAX, FTSE and China A50 technical analysis: Technical Tuesday - March 2, 2024

Article By: ,  Market Analyst
January 2, 2024 4:45 PM
  • DAX technical analysis: German index could hit new highs
  • FTSE technical analysis: UK stocks showing encouraging signs
  • China A50 technical analysis: Chinese stocks near a bottom finally?

Welcome to the first edition of Technical Tuesday for 2024. In this report, we will get technical on the DAX, FTSE and China A50.

DAX technical analysis: German index could hit new highs

The DAX hit repeated record highs, reaching a peak of just over 17000 in mid-December, before drifting lower in the final days of the year. The German index started the first trading day of 2024 on the front-foot, before losing momentum alongside US indices. Clearly, the trend is still pretty much bullish and it remains in a “buy-the-dip” rather than “sell-the-rip” mode, until the charts tell us otherwise.

The key support area that needs to get defended is that shaded blue area on the chart, between 16286 to 16532. This near-250-point range is where the highs of 2021 and 2022, and that of July 2023, were made. Once strong resistance, this area now needs to turn into support to keep the bulls happy.

For as long as the above-mentioned support area holds, we will be anticipating the German DAX index to hit new highs this year. The next bullish target is at 17004, the December 2023 all-time high, followed by the 127.2 and 161.8 percent Fibonacci extension levels of the drop from July 2023 high, at 17061 and 17733, respectively.

If the index fails to hold support in that 16286 to 16532 range, then we could see a sharp correction towards the next big support level at 16,000, which was the base of the breakout at the end of November.

FTSE technical analysis: UK stocks showing encouraging signs

The broken trend line on the FTSE means the path of least resistance is to the upside despite a sluggish start to the new year. At the time of writing, the UK benchmark index was testing key support, starting at 7688ish. This level marks the high from 2022, a level which proved to be a tough nut to crack on multiple occasions last year, before finally giving way in December. From a bullish point of view, an ideal scenario would be for the index to hold above this level now, in order to gear up for another breakout.

From here, the next upside target is the December 2023 high at just below 7770, followed by the February 2023 high of 8046.

On the downside, a convincing break below 7688 could pave the way towards the 200-day average at 7669.

China A50 technical analysis: Chinese stocks near a bottom finally?

While the rest of the global stock indices hit repeated multi-year or all-time highs, Chinese markets repeatedly unperformed throughout 2023. The China A50 index broke below the pandemic-low of 11569 that was hit in March 2020, before going on to take out the October 2022 low at 11161. However, late in the month of December, the index showed some signs of life, and the bulls were able to push the index back above the October 2022 low. This was a possible bullish reversal sign, as too was the fact it had created a double bottom around 109884, prior to staging a rally off the multi-year lows.

Moving forward, the bulls will want the index to hold around the current level of around 11270ish to 11161ish (shaded blue area on the chart). A bounce from around here in the next day or two would be very ideal. Failure to find support means the bulls will have to wait a little longer before the index potentially finds a bottom.

For confirmation, we will need to see a break above the bearish trend line and key resistance around 11546-11570 area (March 2020 low).

Source for all charts used in this article: TradingVIew.com

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

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