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Levels to watch: FTSE 100, DAX and Dow

Recent gains have been tempered somewhat overnight, yet with European indices near upside breakout levels, we could see a further outperformance in the FTSE 100 and DAX.

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.

FTSE 100 consolidating around key resistance

The FTSE 100 managed to break above the 7256 mark earlier in the week, hitting the highest level in over a month. This threshold is important for the index and the consolidation we are currently seeing is a reflection of that.

With the price breaking below the ascending trendline at the bottom of a rising wedge, there is a possibility of a retracement from here. As such, watch for an hourly close above 7272 to signal a continuation of the recent uptrend, where 7340 represents the next big hurdle to the upside.

DAX pulls back from breakout level

The DAX moved within touching distance of the crucial 12,477 resistance level on Tuesday, with the price subsequently pulling back to below the lower threshold of a rising wedge. This points towards the potential of further downside, given the wider creation of lower highs.

However, for us to start looking at this index in a more bearish manner, the 12,201 level needs to be broken. Until then, there remains a good chance we will head back towards 12,477, which, if broken, would signal a more bullish shift for the index.

Dow back into trendline support

The Dow Jones has dropped back into trendline support once more this morning, with near-term price action taking on a symmetrical triangle shape consisting of lower highs and higher lows.

The wider downtrend points towards a likely break lower, with any rally coming into trendline and horizontal resistance (24,637) pretty quickly. A break below trendline support would provide a near-term sell signal, yet a move below 23,738 would provide greater confidence of a protracted bearish move for the pair.

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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.