Risk Sentiment Rebounds But For How Long?Equities markets appear to be fighting back this week as most indexes have made a move off the lows recorded late last week. The ongoing uncertainty around the Russian invasion of Ukraine means that traders are very much susceptible to two-way risks. With Ukraine so far managing to hold off the Russian attack, Kyiv remains uncaptured, and with the West piling heavy sanctions on Russia, as well as aiding Ukraine with funding and weaponry, current price action suggests there is hope that Ukraine can hold out and a truce can be agreed.Yesterday’s first round of peace talks ended without resolution, as expected. However, both sides agreed to hold further talks in the coming days. While markets appear to be showing some relief that a) Ukraine hasn’t been taken over, for now at least, and b) Russia’s involvement in peace talks suggests that perhaps the toll of the fighting and the toll of the sanctions mean a truce can be agreed, there are still clear risks. As the invasion drags on, there are fears that Russia will escalate the violence further. Already, there has been widespread condemnation of Russia’s use of cluster bombs and targeting of civilians, particularly in yesterday’s shelling of Kharkiv. Given the very precarious situation, risk sentiment remains highly neurotic to current news flow and caution is warranted.Technical ViewsDAXThe sell off in the DAX last week saw price breaking down further with the market piercing beneath the 14170.79 level briefly. Price has since reclaimed the level. However, with both MACD and RSI bearish, downside risks remain unless bulls can get back above the 14791.27 level near-term. To the downside, 13672.31 is the next support to note.S&P 500The market briefly tested below the 4221.25 level last week before solid demand saw price quickly moving back above. Given the strong upturn, it now looks as though we might have a double bottom in play, suggesting room for further upside, with MACD and RSI turning higher also. Bulls will need to see a break of the bear channel top and the 2274.25 level to encourage fresh momentum.FTSEWe’ve seen heavy two-way traffic in the FTSE over recent sessions. The test of 7241 saw the market quickly rebounding to the 7558.7 level, which is still holding as resistance for now. Price is currently sitting atop the 7362.6 level in the middle of the bull channel. To the topside, a break of 7558.7 will put focus on 7691.6 next while to the downside a break of 7241 will put focus on the bull channel low and 7137 next.NIKKEIThe Nikkei continues to hold support at the 26246 level for now. While the market remains below the broken triangle, the current structure has the potential to carve out a double bottom. Given the bullish divergence in momentum studies, this might see a broader reversal higher if bulls can get back above the 27422.9 level quickly.
Source: Tickmill
