Levels to watch: FTSE, DAX and Dow

The FTSE has returned to massive support level which could spark markets into a selloff, yet could we see a double bottom spur a recovery instead? 

A man looking at a candlestick chart
Source: Bloomberg

FTSE on the cusp

The FTSE is selling off once more this morning, with the price falling to 6252 support. This level is huge and a break and close below it could lead to significant losses. The fact that yesterday saw the price create a high equal to the Tuesday high means there were tentative signs that this market could be bottoming out. Thus another failed break below 6252 could provide a nice bounce and potential double bottom. However, ultimately, we will need to see either a break and close above 6330 or below 6252 for us to gain a clear direction in this market.

A closed intraday (four hour or one hour) candle above 6330 would look towards 6356, 6396 and 6429 levels. A close below 6252 would look towards 6174 and 6133.

DAX choppy amid rounded top

The DAX has seen very choppy price action yesterday, with the price now resting below the 50-period SMA (four hour). The overall pattern of swing highs and lows shows a mark which could be rolling over, with lower highs and lows being established over the past week. This insinuates a move back below 10,726 with any bounce falling short of 11,000. As such, the outlook is more bearish than bullish with rallies likely to be sold into.

A close below 10,835 would point to a move back towards 10,726, with the major 10,653 level the next support level to be taken out. A bullish view would only come with a move above 11,000.

Awaiting Dow consolidation exit

The Dow Jones has seen a decent move higher yesterday, only to selloff heavily at the latter part of the session. We are seeing it begin to move lower once more today and the crucial question will be whether the price can close below 17,686 to challenge Tuesday’s 17,655 low. This market remains relatively choppy for now and direction is difficult to gauge. Thus a close below 17,655 would point to a continuation lower, with 17,608 and 17,549 in view. A close above 17,846 would point towards a strengthening with 17,924 and 17,978.

This information has been prepared by IG, a trading name of IG Markets 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.