Technical Analysis update for March 2026

As regular 80-20 Investor members know, periodically I like to look at what technical analysis suggests about where key markets might be headed next. However, it's been more than a year since I last wrote a technical analysis piece. Therefore, it's an opportune time to take a look at the technical analysis for several key markets, especially given the trend reversals we've seen as a result of the war in the Middle East.

Remember, technical analysis is not a crystal ball but instead gives you a range of possible outcomes and levels to watch. In volatile market conditions like we have now, technical analysis tends to prove particularly useful and traders and professional investors start to pay greater attention to it.

As ever, I like to recap what technical analysis is and how it works. I always advise investors not to try and time the market because they will never get it right. However, there's nothing wrong with trying to determine a range of possible future outcomes within investment markets. Think of it like a weather forecast. It’s not 100% accurate but it will give you a better idea of whether a storm is on the horizon or when one might blow over. Technical analysis is the nearest thing we have to weather forecasting in the investment world.

What is technical analysis? - A recap

For those who don't already know or have forgotten, here is an explanation of what technical analysis is:

Trying to predict the future of the stock market is akin to reading tea leaves. Personal predictions are almost always clouded by prejudices that reaffirm what we ‘want’ to happen rather than what is ‘most likely’ to happen.

That is why one objective method is to use technical analysis to try and judge likely outcomes. So what is technical analysis? One line of thinking is that stock markets are driven largely by human behaviour. At the simplest level you could argue that fear and greed drive a lot of investors’ actions. Let’s say that an opportunity presents itself and some investors jump on it and buy the shares in question. The demand then drives up the price. More investors jump on the bandwagon looking to profit. Then at some point the tide turns (fear sets in) as people think the price for the shares is looking expensive and so people start selling. More and more people start selling to take profits and the price falls. At some point the price falls until others think the shares look cheap and start buying, outnumbering the number of sellers. Again demand outstrips supply and the price goes back up.

This see-sawing explains the movement you see in stock market charts such as those below. The price at which investors start bailing and selling the shares is called a point of resistance while the point at which they pile in is called a point of support.

As such there is a surprising level of predictability to human behaviour. In terms of the stock market that means when the price goes through historic points of resistance or support it can indicate a new unfolding market rally or collapse. Why does it do this? Part of it will be because traders trading in millions of pounds will use these points of resistance and support to trigger trades. Yet for a lot of investors they might not even be aware of these inflexion points. They simply are reacting to how other people in the market behave. Put it this way, when stock markets fall you feel tempted to sell, right? Also once it starts to rally, you are tempted to jump in? That’s why these patterns have a tendency to repeat.

Some investors and traders swear by it and trade solely using technical analysis. I don’t fall into that camp. I view technical analysis like a road map drawn by someone who has already completed a journey to somewhere near where you are planning to drive to. The road map won’t take you exactly to your intended destination, nor will it be entirely accurate. However, it will give you a better sense of what to expect. Then if you decide you like the look of a particular market you can use 80-20 Investor’s ‘Best funds by Sector‘ data to help choose an actual fund to invest in.

Latest technical analysis

There are different types of technical analysis, however, I find the most useful guide is to focus on the points of resistance and support.. So below I provide technical analysis, looking at areas of support (the green lines in the charts below) and resistance (the red lines), on key investment markets.  In some instances, I also show moving average lines.

As usual, I focus on the US, UK and Japanese stock markets, but, rather than also looking at the pound vs dollar exchange rate, I have instead decided to also analyse the US dollar index and the price of gold, given their influence on investment trends and portfolio performance. You can click the charts to enlarge them.

US stock market

Following the historic rally fuelled by AI-enthusiasm throughout 2025, the S&P 500 reached an all-time high of 7,002.58 in January 2026. However, a combination of inflation fears, an energy shock (driven by the war in the Middle East) and shifting Federal Reserve rate expectations has caused the S&P 500 to fall back towards 6600, forming a new downtrend (the sloping red line).

The index rebounded off the 6630 support line, testing the 200-day moving average, in a short-term positive sign for bullish investors. A strong break below the 200-day moving average (200 DMA) would be bearish and suggest that further downside is likely. If the S&P 500 does indeed break below 6630 and the 200 DMA, then the November 2025 low of 6539 comes into play. If that fails too, then a fall to 6500 is likely. That would still only represent a fall of just over 7% from the all-time high, and so wouldn't even be classified as a correction (a fall of at least 10%).

If the index can hold above 6630 and reclaim 6800 it could then make a renewed attempt at the all-time high.

If we zoom out (see the chart below), then a sustained sell-off would bring the support lines of 6300 and 6130 into play, the latter of which was the early 2025 market high. Interestingly, 6300 would equate to an exact 10% fall for the S&P 500, which would meet the accepted definition of a correction.

However, the chart also shows how the market rebounded following the April 2025 market crash caused by Trump's Liberation Day and, in doing so, formed a rising uptrend support line (shown in green). This uptrend remains intact despite the market volatility we've seen since the start of the war in the Middle East. It would only become invalidated if the market breaks down through it. Perhaps not by coincidence, the 5650 support line is also the converging point of the long-term uptrend line, the short-term downtrend line and would represent a 20% fall from the all-time high, meeting the definition of a bear market.

What could trigger such a sell-off? One possibility is if oil remains structurally above $100 and the US Federal Reserve abandons its 2026 rate-cutting cycle.

UK stock market

Heavily weighted in energy, financials, and defence, the index rallied an impressive 21.5% in 2025, successfully crossing the historic 10,000 milestone and peaking at 10,938. Also, over the last few months, the FTSE 100 has benefited from investor sector rotation and AI investment fatigue.

Despite this, the $100+ oil price has driven fears of an inflation shock for the UK economy, especially given its dependence on importing energy. This has caused the Bank of England (BoE) to keep rates elevated at 3.75%, and the market is now predicting that the next change to the BoE base rate will be a hike, rather than a cut.

Like other global equity markets, this index has pulled back from its all-time high and sits around the 10300 level as I write this. On the upside, 10400 is going to be a significant resistance level to overcome if the index is going to attempt to break the 11,000 level and set a new all-time high.

Unfortunately, the pullback has meant that the FTSE 100 broke the multi-month uptrend line, but the good news is that the 10250 support level has held firm after a number of tests. If the index keeps testing the 10250 support level, the odds increase that it will break down below it. If that happens, then look to 10120 and 9900 for support. The former also represents the floor of a longer-term rising uptrend. Therefore, if this breaks, then 9900 is likely to be visited fairly quickly, which would represent a 10% pullback (correction) from the all-time high.

If 9900 fails, then there are a number of support levels below, such as 9700, but a much deeper correction is then on the cards. The chart below provides context of much lower support levels were the market to unravel.

Japanese stock market

After surging 26% in 2025 to a multi-decade high near 59,700, Japan's heavy reliance on imported energy caused the Nikkei to suffer a violent 6.1% plunge over a mere four days in early March 2026 following the Strait of Hormuz disruptions.

Despite a correction (a fall of more than 10% from its recent high), from a technical analysis perspective, the Nikkei 225 has so far proved remarkably resilient. The index has repeatedly found intense buying interest exactly at its 50-day moving average (not shown) and the bottom of the uptrend channel that dates back to April 2025. The 52411 support level remains key, and a break above 55,600 and then 56,500 would confirm that the bulls are back in charge of this market. In all likelihood, a revisit to the recent highs would then follow.

However, a break below the uptrend line puts the bull market into doubt, and all eyes will be on the psychologically important 50,000 level. If we break below there, then 48538 should offer strong support and would mark a near 20% fall from the all-time high.

The chart below gives the recent surge in the Nikkei 225 some longer-term context and the importance of the 42224 level if the Japanese stock market were to completely implode.

US Dollar Index (DXY)

From a technical perspective, the DXY is currently challenging a major resistance band just around the 100 psychological level, as shown in the chart below. A sustained close above this key barrier would confirm a bullish breakout, opening the door for continuation toward the 101.00 level. On the downside, initial pullback support is located at 99.86, followed by deeper structural support around 98.86. With the Federal Reserve expected to maintain a "higher for longer" stance on interest rates to combat energy-driven inflation risks, the dollar appears likely to remain structurally supported, meaning dips may continue to attract buyers.

If the DXY does push higher, then the profitable trends we’ve seen before the war in the Middle East will unravel. A relentlessly strong dollar acts as a severe headwind for emerging market equities in particular, but also for most commodities (with the exception being oil).

Gold

After hitting an all-time high of $5,586 per ounce in January, gold has endured significant downward pressure, largely being driven by the strength of the US dollar and fading expectations for near-term Fed rate cuts, but also profit-taking. From a technical standpoint, gold has broken below the psychologically important $5,000 level as well as the 50-day moving average (a short-term bearish sign). If gold moves higher from here, it is now facing immediate resistance at $5,000 and in the $5,060 zone. If buyers can clear this hurdle, the next upside targets sit at $5,075 and $5,145. Should the sell-off deepen, then $4,600 is likely to prove a strong support level as it did during the aggressive sell-off at the start of February.