Article by IG Senior Market Analyst Axel Rudolph

FTSE 100, DAX 40, Russell 2000 – Analysis and Charts

​​​FTSE 100 under pressure as UK GDP shrinks

​The FTSE 100 briefly made a new two-month high at 7,609 on Tuesday, along the September-to-December downtrend line, before falling back to its 200-day simple moving average (SMA) at 7,562 as UK GDP disappoints. The services sector was the largest faller, followed by production and construction.

​Further sideways trading ahead of this evening’s Federal Open Market Committee (FOMC) and Thursday’s Bank of England (BoE) meetings is likely to be seen. A fall through Tuesday’s 7,541 low may lead to Monday’s low and the 55-day simple moving average (SMA) at 7,493 to 7,478 being revisited. Minor resistance above Friday’s 7,583 high comes in at this week’s 7,609 peak.

FTSE 100 Daily Chart

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​DAX 40 consolidates below a new record high

​The DAX 40’s strong advance from its October low over six consecutive bullish weeks led to a new record high being made above the 16,850 mark on Tuesday but did so in low volume and volatility despite better-than-expected German ZEW consumer morale.

​All eyes are now on Thursday’s European Central Bank (ECB) monetary policy meeting and the press conference which will follow it.

​A rise above Tuesday’s all-time high at 16,853 would eye the 16,900 mark whereas a slip through Monday’s 16,735 low could lead to a drop back towards the October-to-December uptrend line at 16,544 being witnessed.

DAX 40 Daily Chart

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​Russell 2000 trades at three-month highs but looks potentially toppish

​The Russell 2000, the great underperformer of US stock indices with only a 7.5% gain year-to-date, hit a three-month high at 1,902 on Tuesday ahead of Wednesday’s Federal Reserve (Fed) meeting and rate announcement. ​Since this week’s high has been accompanied by negative divergence on the daily Relative Strength Index (RSI), there is a potential for a bearish reversal soon rearing its head.

​A fall through Tuesday’s 1,866 low would eye the October-to-November uptrend line at 1,856 as well as last week’s low at 1,844. Further down meanders the 200-day simple moving average (SMA) at 1,817 which may act as support, if reached.

​A rise above 1,902 would put the September peak at 1,931 on the cards, though.

Russell 200 Daily Chart