European and UK indices seem to have turned the corner as the bounce off the recent lows would suggest. The proximity to the Ukraine invasion and the Germany’s reliance on Russian energy accelerated the downtrend as the Dax plunged 20% lower than the November high.

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Similarly, the FTSE is well above its low and now well above the psychological 7000 level. The FTSE however, did not decline 20% from its high and therefore avoided a technical bear market.

FTSE Analysis and Key Technical Levels

In general, European equity markets appear optimistic after Putin mentioned on Friday that recent talks showed ‘positive shifts’ with delegates who are expected to resume talks today.

Looking at the FTSE chart, the RSI has proven rather reliable in preceding bullish reversals but has not had the same effect when it comes to bearish reversals, meaning levels of resistance may provide a better idea of when short term bullish momentum may slow down. For example, today and Friday we witnessed price action trade well above 7225 only to retrace back below it. Ending the day below 7225 suggests that this is a level that bears find attractive, pushing prices towards the psychological level at 7000. However, a break and hold above 7225, opens the door to the bullish continuation with 7306 and 7405 the next levels of resistance.

FTSE Daily Chart

Source: IG, prepared by Richard Snow