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Levels to watch: FTSE, DAX and Dow

With a massive US centric rally coming into play yesterday, a divergence between the FTSE, DAX and Dow has appeared. But which is the leader?

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.
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Source: Bloomberg

FTSE could extend late gains

Yesterday saw an incredible day of price action across the Western indices, with a sharp sell-off entirely reversed within the US session. The index has drifted lower overnight, yet given the shallow slant of this price action, there was always a good chance it represented a retracement rather than a top.

With price currently breaking higher once more, a closed hourly candle above yesterday’s high of 5973 would provide a bullish view for the short-term. In this event, the next resistance levels of note are 6024, 6033 and 6065.

However, be aware that with the DAX and Dow moving lower, much of this move is attributed to a 10% gain in Lloyds shares. This makes this rally somewhat unreliable.

As such, there is a good chance we could see a new lower high created, with the market turning lower once more below 6065 to accompany yesterday’s new low. Thus any bullish upside is only deemed short-term. Support levels of note are 5946, 5911, 5844. 

Click here to see the FTSE chart

DAX selling off sharply

The DAX is reversing heavily lower this morning, following on from a rally into 9352 resistance. This is a great sign that we are set to see further selling come into play given the failure to break through 9429.

With the DAX clearly looking like it is in the back end of a topping pattern, there is a good chance we could see another big move lower today, with yesterday’s low of 9130 the major support level in view.

Thus a bearish view remains in play, unless we see a break back up through 9325, which would subsequently look towards 9352 and 9429 resistance levels.

Click here to see the DAX chart

Dow drifts lower following big bounce

Yesterday’s rally in the Dow Jones was pretty spectacular, with the index breaking through 16,457 resistance in the process.

This breaks the creation of lower highs and lows pattern that has been in place since Monday. Thus we have somewhat of a tentative and short-term bearish view in place until this pattern develops to show a clear downtrend once more.

This view would be negated with a move back above yesterday’s high of 16,574. Support levels of note are 16,388, 16,275 and 16,164, with resistance at 16,511, 16,549 and 16,663. 

Click here to see the Dow Jones chart

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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.