Levels to watch: FTSE, DAX and Dow

Indices seek to gain ground following a NFP fuelled sell-off on Friday. However, with key resistance ahead, will initial gains hold?

Data board
Source: Bloomberg

FTSE 100 breaking through crucial level
Friday saw substantial losses for the FTSE, with traders focusing in on the economics of the NFP number rather than the monetary policy implications. However, the second part of the argument has come into play since, with the index going on to rally.

Crucially, we have seen price surpass Friday’s high of 6253, which negates the post-NFP sell-off. With this in mind, further gains seem likely, with long preferred on pullbacks. Key resistance levels to watch are 6273, 6281 and 6293. A break back below 6227 would cancel out this bullish view.

DAX rests below crucial resistance level
The index failed to gain the kind of ground we saw in the FTSE on Friday, with upside largely confined to the crucial 10,121 resistance level. This level represents, arguably, the most important support and resistance level in 2016 to date, which has been respected repeatedly.

As such, the reaction to this level will dictate the state of play for the DAX, where an hourly close above 10,121 would look for a more bullish outlook for the day and an hourly close below 10,086 would look for further losses.

Can Dow break from choppy consolidation?
The Dow has seen a relatively choppy June so far, with the index attempting to break lower on three occasions. However, all have resulted in long lower shadows and subsequent gains. This morning we are seeing the index attempt to break higher towards the key 17,857 level.

Ultimately, it is clear we are set within a period of consolidation, upon which we are expecting to break out sooner or later. A closed hourly candle above 17,857 could provide this.

Looking at the wider picture, it does look likely the break will be higher, with the June weakness looking like a retracement of the late-May rally. An hourly close below 17,696 would negate this view. 

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