May has already begun, and the Covid crisis has already spread throughout the world. Europe has suffered a lot, and there is a big uncertainty about the economy in every country. Here we want to take a look at the stock market indexes of UK, Germany, France, and Spain on May, 8.
FTSE 100 – UK
The index is currently around 5900. During the Covid crisis, it reached its low trough 4900. We cannot know if the current rise is just a rebound that will go down again or a really swift to start a new uptrend.
What we can do is look at some resistance levels in which if the price stops, we can think that a new down leg may start.
The first of this level is the 30-week moving average. Right now, it is at 6600. It decreases little by little with the passage of time. Thus, we would look at the level between 6400 and 6600.
Once and if that level is surpassed, the next resistance area is 6700 and then 7000. In principle, the 7000 level should be stronger and more difficult.
DAX 30 – Germany
The German index reached a very important support during the Covid crisis and stopped there. This make us think that it will be difficult to go down beyond that, but remember that difficult does not mean impossible. The level we are talking about is around 8900 – 8700. In the same logic, should it lose that level, we would expect important issues.
Looking up, the first important resistance is around 11500 – 11600. After that, the next level would be 12000, and if the index surpasses it, then 12650 and 12950.
CAC 40 – France
The CAC 40 index is showing weakness in comparison to the FTSE 100 and DAX 30. While the two latest are losing about 21 percent, if we take the level before the Covid crash as a reference, the CAC 40 is losing about 25 percent.
The first important resistance is around 4900, and then there is other around 5130 – 5180. This one is, in our opinion, an important one, and the price is more likely to stop on it. After that, 5600 -5700, and then the level previous to the crisis was around 6100.
IBEX 35 – Spain
Spain has been significantly hit by the Covid. In comparison to the FTSE 100, investors have lost about 10 percent more because of the Covid crash.
The closest resistance is 7200, and then we can look at the gaps formed by the Covid downfall — around 7400 and 8400. However, the weakness that is showing the index, in comparison to other countries, makes us think that it is more likely to visit the bottom again.
Conclusion
Theory says that once a price surpass one level, it should continue up to the next. This is not always the case, of course. Also, it is a good idea to wait until the level is surpassed after the day closes, not only in intraday trading. Always keep in mind that there can be unexpected movements.
This is not an investment recommendation. If you want or need one, please ask your financial advisor.