Trade Wars

Indices have a serious choice to make after first quarter volatility

S&P500

Global indices experienced high volatility during the first quarter of 2022, disrupting otherwise extraordinary – or generally dynamic – uptrends. In the former camp, the S&P 500 carved out an extraordinarily tight and persistent uptrend channel through the start of the year. The pullback we’ve seen over the past three weeks wasn’t consistent and didn’t register as a full-fledged ‘collapse’, but it did break the complacent supply that has characterized the market since the recovery from the financial crisis. from 2007-2008. . The end of March has pushed us so far into the middle of the 2022 range. Stall and reverse before we get to 4,820 and we are eyeing a head and shoulders setup. We can consolidate well for a while, but 4820 and 4100 are the critical levels.

S&P 500 Weekly Chart

Chart created with the IG platform

DAX-40

The benchmark German index has seen much the same technical backdrop as its US counterpart in the post-pandemic recovery, but the period between April 2021 and February this year has been more overtly a consolidation pattern rather than just a simple one. slower progress. In structure, this 10 month period takes the form of a head and shoulders pattern with the breakout of 14,850 charged by Russia’s invasion of Ukraine confirming the “cleavage”. The technical dip that resulted in this clearing was extraordinary, pushing the 14-week RSI to an oversold measure that rivaled the collapse of the pandemic halt in February and March 2020. Starting in the new quarter, we are retesting the former support at 14,850 as new resistance . Break above that and the market will likely prove very choppy over the next three months. Hold and step back, on the other hand, and it’ll look like a classic progressive rollover.

DAX 40 Weekly Chart

Second Quarter Technical Forecast: Indices Have a Serious Choice to Make After First Quarter Volatility

Chart created with the IG platform

FTSE100

While the DAX 40 broke its extended support and must now decide whether or not to treat the level as new resistance, its British neighbor experienced the volatility of the Ukrainian invasion without breaking the critical technical floor. After suffering its worst week since the peak of the pandemic in late February, the index plunged into a crowded support zone between 6,800 and 6,900. The index tested the floor, but ultimately held. That leaves us with some pretty clear technical boundaries to work with moving into the new quarter. Beyond the immediate low of 6,850, the next lower levels are the 38.2 and 50% retracements of the post-pandemic run at 6,575 and 6,230 respectively. On the upside, February’s high of around 7,700 is found to extend range resistance into August 2018. Resistance is really a zone though, up to the record high of 7,900 set in early 2018.

FTSE 100 Weekly Chart

Second Quarter Technical Forecast: Indices Have a Serious Choice to Make After First Quarter Volatility

Chart created with the IG platform

HANG SENG INDEX

Among the major global indices, perhaps the largest deviation from the average comes from the Chinese and Hong Kong markets. The structure of the Hang Seng index is significantly different from what we see in the S&P 500 or the DAX. With a series of major lower highs over the four-year psat – in part due to advancing trade wars and Covid policies – first-quarter volatility hit when the market was positioned near support. Breaking the low of the range at 22,850 created enough momentum to then break trendline support dating back to 2009 and the midpoint of the post-Great Financial Crisis range. This support is now an immediate resistance heading into the second quarter. A breakout higher would probably not be clean given the overhead density. Alternatively, a hold and reject from this 22,000 mark can move the market price to a wide range established during the last quarter’s volatility down to 18,000, which is a low range established in three major tests. dating back to the last decade.

HSI Weekly Chart

Second Quarter Technical Forecast: Indices Have a Serious Choice to Make After First Quarter Volatility

Chart created with the IG platform

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