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European stock market indices drop in post-Eastern trading
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Russian offensive in Donbas begins
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Technical look at DE30, FRA40 and UK100
European indices are trading lower following an Easter break. Majority of blue chips indices from the Old Continent trade over 1% lower. FTSE MIB (ITA40) and Swiss SMI (SUI20) are top laggards, dropping around 2% each. UK FTSE 100 (UK100) can be seen as an outperformer as it drops 'only' 0.5%.
Economic calendar for today is almost empty. The same can be said about the European earnings calendar. While there are some interesting earnings scheduled from the US companies, earnings season in Europe usually begins a bit later. As such, traders need to focus on geopolitics and technicals. The next phase of Russia-Ukraine war - a big offensive in Donbas - began this week. It is said to be decisive phase of the war so it is prudent for traders to keep watch on incoming news. However, it should be said that markets are not as reactive to war-related news as they were a month or two ago
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Taking a look at the German DAX (DE30) at H1 interval, we can see that an attempt to launch a bigger upward move, following a break above the downward channel, failed. Upper limit of market geometry in the 14,185 pts area limited upward moves and now the index is making a break back below the upper limit of the aforementioned channel. If sellers manage to hold the index below 14,050 pts area, an retest of recent lows could come next. Breaking below recent lows in the 13,900 pts area would mean that a new lower low in a downtrend was painted and further pullback will be the base case scenario.
Source: xStation5
FRA40
French CAC40 (FRA40) is taking a dive today. Index painted, what looks like a right shoulder of the head and shoulders pattern and is now testing the neckline of the formation in the 6,425 pts area. This area is additionally strengthened by the 38.2% retracement of the upward move launch in early-March. A break below this hurdle could be seen as a bearish signal, heralding a deeper drop. Textbook range of the breakout from head and shoulders pattern can be found near 6,040 pts - around 6% below current market price.
Source: xStation5
UK100
FTSE 100 (UK100) is one of the more resilient European indices today. Nevertheless, the index is still taking a hit. Taking a look at the chart at H4 interval, we can see that price is pulling back and nearest a recent local support in the 7,500 pts area. A break below would pave the way for a test of the lower limit of a market geometry in the 7,445 pts area. This zone is additionally strengthened by the 23.6% retracement of the upward move launched in early March and is guarding a short-term uptrend. Break below could hint at trend reversal.
Source: xStation5
