Levels to watch: FTSE, DAX and Dow

The downtrend remains for indices, yet with a weaker than usual selloff, there are warning signs that we could see a break higher.

Data chart
Source: Bloomberg

FTSE downtrend weakening
The FTSE sold off once more yesterday, with price recovering later into the session. While this morning started in a bearish manner, the worry was that we were not seeing selling occur with the same degree of vigor as previous occasions. Thus, this provided a nod to the potential of an upside break.

Given the clear downtrend in play, a bearish view holds until we see the break of 5969. However, this is seemingly ever more likely given the rally we are currently seeing. Until that does happen, the downtrend remains in play, where 5902, 5878 and 5864 represent the next support levels. The bullish signal would be an hourly close above 5969 which would bring resistance levels of 6011 and 6024 into view. 

DAX rallying off initial selling
The DAX downtrend continued apace yesterday, with a break below 10,246 followed up by yet another retracement higher. We are resuming the selloff once more this morning and thus the bearish outlook tentatively remains.

However, the shallow selloff followed by a bullish engulfing clearly brings a good chance of the market have a day in the green ahead of tomorrow’s FOMC decision. However, for now the bearish bias holds with support levels of 10,246, 10,188 and 10,121 in scope. The bearish view holds unless we see an hourly close back above 10,330, which would then look towards 10,448, 10,486 and 10,524 resistance levels.  

Dow rallying towards key resistance
The Dow Jones has also been drifting lower this morning, in a manner which provided question marks over whether the selling pressure would have enough gusto to retake the 17,140 support level.

Ultimately, the bearish view holds until price sees an hourly close above 17,415. However, given the initial warning sign and now a break higher, the bullish scenario is becoming ever more likely. Resistance levels of note are 17,399, 17,415 and 17,457, whereas support levels of note are 17,338, 17,278, 17,172 and 17,140.

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.