CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Levels to watch: FTSE, DAX and Dow

After a Yellen-fueled blockbuster day, yesterday, we have a good chance of seeing some weakness come into play for the European indices.

IG Analyst

Publication date : 2017-07-13T09:44:10+0100

Trading floor

Source: Bloomberg

FTSE consolidating after sharp rally

The FTSE managed to break out from its range in style yesterday, with the index gaining after dovish comments from Janet Yellen. We are seeing consolidation this morning, with the price breaking sideways from a symmetrical triangle.

Ultimately, we are looking for a break from the 7409-7434 zone to provide a directional bias from here. Given the fact that we have not seen the index break through the first swing high of 7453, we could still be looking at a retracement of the late June sell-off. Hence it is no surprise that we are seeing some selling come into play here.

As such, watch out for a break through 7453 as a strong bullish signal. Until then, it looks likely we will see some selling come into play today.

FTSE chart

FTSE chart

FTSE chart

Will DAX pullback last?

The DAX is also starting to weaken off the back of yesterday’s blockbuster rally. We have seen the index move into the 76.4% retracement region, which highlights the fact that we could yet be seeing another retracement rally before we sell off once more.

For that idea to be negated, we would need to see a break up through the 12,735 resistance level. Until then, there is a chance of some weakness coming back into play. Watch the rising wedge in the stochastic oscillator for a potential sell signal.

DAX chart

DAX chart

DAX chart

Dow turns higher towards trendline once more

The Dow Jones rallied into trendline resistance yesterday, reaching a new all-time high in the process. This new higher high paves the way for further potential gains, with an hourly close above the trendline providing a strong buy signal.

Above there we have zero resistance of note, providing room for a potential strong leg higher. However, until we break through this resistance level, there is always a chance of a retracement, especially given the potential for a similar move in the European markets.

Dow Jones chart

Dow Jones chart

Dow Jones chart

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