CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.

Levels to watch: FTSE, Dax and Dow

Greece’s defiant stand has rattled markets across the board this morning, with widespread losses continuing a trend that began on Friday evening.

CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.
London skyline
Source: Bloomberg

Yet again US indices finished last week relatively strongly, only for futures markets to sell off after the close. This set the stage for a weaker open this morning, but the picture has been clouded by the Greek prime minister, who, in a barn-storming speech, firmly declared that Greece would not seek a bailout extension. A clash between the country and the rest of the eurozone is now almost inevitable.

FTSE hit by Greek crisis

The index has opened sharply lower this morning, moving outside of the 100-point range that governed this market for most of the past week.

Daily pivot points suggest support around 6740, with 6620 being the next target. The RSI continues its move lower, as the negative divergence I highlighted last week takes effect.

Any bounce will target the 6900 peak from last week, although with the Greek crisis entering a new phase this seems a distant target. The loss of the rising hourly trendline means that the emphasis here has shifted to the downside

DAX tests 10,600 level

Eurozone markets have been even more heavily affected by the Greek news over the weekend, with the DAX falling back from its 100-point range seen last week to test the 10,600 area this morning. This is holding for now but, as I have noted before, there is mostly thin air below it until the 50-DMA at 10,070.

The trend on the daily RSI points to additional downside, reinforced by the move below the hourly trendline that did so well to support the index throughout January. Any selloff in the coming weeks sets up the index (and other European indices) for a rally as ECB QE gets underway in March.

On the hourly chart the 28/29 January lows around 10,590 could see some buyers step in, but a drop below here would head towards 10,300 as the next possible support area. Meanwhile, on the upside, the 200-hour at 17,790 and then the all-time high around 11,000 are the main targets.

Dow tumbles from Friday's highs

This index is still holding above the downward trendline that it broke last week, even if it is sharply off the highs of Friday’s session. This downward trendline currently coincides with the 50-DMA, so we could see support enter around the 17,670 area.

17,900 is first resistance on the upside, being the high from early January and where Friday’s gains began to falter. A daily close above here targets the December peak above 18,000.

A close below the downward trend from those December highs would reverse the bullish breakout of last week and put the emphasis back on 17,600 and then the 100-DMA at 17,400. In the background hover the 200-DMA and the rising trend off the October lows, currently around 17,200.

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.  Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. 

CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.