CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

FTSE 100, DAX and Dow rally towards crucial resistance levels

FTSE 100, DAX and Dow surge higher, yet questions remain given recent consolidation zone.

FTSE 100 rallies through key resistance

The FTSE 100 has managed to surge higher after last weeks failed attempt to break from this uptrend. The rise through 6010 brings about a fresh higher high, thus raising the likelihood of a break back into the April peak of 6211.

While we could see further upside, it is worth noting that risks still remain given that much of this upside is driven by the same short-term jubilance that came with the Gilead coronavirus treatment. Such a boost can only last so long, and thus there is a chance we could continue this period of consolidation.

With that in mind, a break back below 6031 and a drop below 80 on the stochastic could provide a more bearish outlook. Until then, the short-term picture remains bullish given the recent surge.

DAX pullback respects previous peak

The DAX is surging higher once again this morning, with the index rising through 11,035 resistance and respecting that breakout level as new support today. That points towards further upside as long as we remain above that 11,035 support level.

To the upside, the major resistance level we need to break comes in the form of 11,342. If that happens, we would be looking at an exit of the consolidation that has dominated since early April. However, the same caveat has applied given the consolidation in play over almost two months.

As such, there is a possibility of the bears coming back into play if the price breaks back below 11,035 and the stochastic breaks below 80. Until then, the bullish short-term trend remains in play.

Dow Jones rallies into key resistance

The Dow Jones has also seen substantial gains since the lows of last week, with the index rising back into the 24,903 level. A break through that point would signal a potential bullish breakout after a month of consolidation.

Nevertheless, given the proximity to that level it could make sense to await such a break first. Until then, there is a chance of a pullback if the stochastic drops below 80 and the price breaks 24,480 support.

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.

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