- US tech stocks soar to new highs, while Europe struggles to regain footing.
- Key technical levels for both Nasdaq 100 and DAX should be watched closely this week.
- Light economic data might give technical analysis more weight in shaping market direction.
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In recent weeks, we've observed a divergence between US and European indexes. The Nasdaq 100 has been reaching new highs, while European indexes, such as Germany's DAX, are looking to rebound after a series of declines.
Despite several percent drops, the DAX's downward movements appear to be mere corrections rather than a trend reversal. From a technical standpoint, it's crucial to monitor key levels for both indexes; as these could signal next moves.
With a sparse macroeconomic calendar this week, aside from Thursday’s US GDP and PCE release, technical levels might play a more significant role in shaping market direction.
Nasdaq 100 Will Eye 20K Barrier Again
The Nasdaq 100, the main index for US technology stocks, continues its rally, with the futures trying to hit new historical highs above the psychological barrier of 20,000 points.
However, a noticeable slowdown at the end of last week, especially during Thursday's session, suggests a possible pullback.
This potential correction could offer a more attractive entry point for investors around the 19,000-point mark, where multiple support levels converge, including an upward trend line and correction equality similar to the DAX.
Should the index fail to react and break below these levels, it would indicate a weakness among bulls and a potential continuation of the rebound. However, current technical indicators do not provide a clear long-term outlook.
DAX Defends Key Support Amid Correction
Following recent declines, the German DAX has rebounded from a critical technical confluence at the 18,000-point level, where the 100% correction geometry aligns with a local demand zone.
So far, buyers have managed to defend this area, suggesting a potential rebound and return to growth. However, the current rebound's lackluster momentum is concerning for bulls, as it does not indicate a strong new upward impulse.
If the bears push the index below 18,000 points, it could pave the way for further declines, with the next significant support level near April's lows at 17,600 points.
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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.