DAX 30, CAC 40, FTSE 100 Price Outlooks:
- The DAX 30 trades narrowly beneath all-time highs, can it push higher in the weeks to come?
- The CAC 40 recently breached technical levels that could offer support in the future
- On the back of a recently-formed golden cross, the FTSE 100 could continue higher
DAX 30, CAC 40, FTSE 100 Forecasts to Start 2021
European indices enter 2021 in good form, trading near their highest levels in months. With the recently inked bilateral trade agreement between the European Union and China alongside the UK-EU Brexit trade deal, a degree of certainty has been offered to trade in the region. Further still, the agreements may help to spur cooperation between the nations and could spark increased economic activity – although further negotiations may be required to iron out the details.
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Either way, the removal of uncertainty in conjunction with a coronavirus vaccine may help to boost sentiment in the DAX 30, CAC 40 and FTSE 100 – despite rampant coronavirus cases and lockdown measures. With some positive fundamental developments and an encouraging technical backdrop, the outlook for the European indices in the days ahead is optimistic.
DAX 30 Price Forecast
The DAX 30 has climbed farther than its French and English counterparts, trading only points away from record levels and the 14,000 mark. Early resistance might reside along the 13,826 level – the index’s prior all-time high tagged in February. Barriers beyond 13,826 are rather sparse, perhaps with an exception at psychological numbers like 14,000 which rest narrowly overhead.
DAX 30 Price Chart: Daily Time Frame (February 2020 – December 2020)
On the other hand, months of gains have created a bevy of potential support for the German equity index. Early support may reside along the September high around 13,461 followed by the 50-day moving average and 13,000 slightly beneath. Trading near record levels and riding above key moving averages, the DAX 30 may be poised to continue higher.
CAC 40 Price Forecast
The CAC 40 trades near its highest levels since late February but gains have slowed in recent weeks. Still, the French equity index rests above its 50 and 200-day moving averages which it can look to employ as support if selling pressures emerge. The Fibonacci level at 5,510 may be similarly supportive despite its proximity to price.
CAC 40 Price Chart: Daily Time Frame (February 2020 – December 2020)
Clear resistance may not exist until a Fibonacci level around 5,875 and the index’s February high at 6,124. Much like the DAX, the CAC 40 enjoys an encouraging outlook to start the new year as it looks to extend its series of higher-highs and higher-lows from March. That said, shorter-term declines remain a possibility across all the indices.
FTSE 100 Price Forecast
The FTSE 100 suffered due to Brexit uncertainty for months, but a recent deal may have opened the door to a longer-term recovery. Bolstered by nearby support and a recent golden cross formation, the FTSE 100 may be the in the early stages of a recovery that could see it catch up to the DAX 30 and CAC 40.
FTSE 100 Price Chart: Daily Time Frame (January 2020 – December 2020)
After crossing above the 200-day moving average in early December, the 50DMA may provide consistent support in the days ahead and it could help carry the FTSE 100 higher. Either way, the recent break out above the June high is an encouraging sign as it creates a higher-high that is a necessary requirement for gains. Various levels of resistance exist overhead but 7,000 is perhaps the most notable as it coincides with two Fibonacci levels and a psychological level. In the meantime, follow @PeterHanksFX on Twitter for updates and analysis.
( 16:01 GMT )
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–Written by Peter Hanks, Strategist for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX