Levels to watch: FTSE, DAX and Dow

It's a mixed picture across the indices, with the DAX and Dow Jones both at crucial areas of resistance, while the FTSE 100 posts what looks like a short-term rally.

Data board
Source: Bloomberg

FTSE rally looks destined to fail

The FTSE is rallying sharply this morning, following a sell-off which broke below the key 7010 support level. This points towards a further weakening of the index to come.

While we are rallying we would need to break above 7068 to negate the bearish view. As such, it makes sense to look for shorts from Fibonacci resistance, with 6980 and 6975 the key support zone to watch. 

DAX at key crossroads

The DAX has managed to rally into a major area of resistance, above which we could see a sharp appreciation for the index. The 10,807 level represents the August peak, which was temporarily broken yesterday to create a nine-month high.

As such, we are at a crossroads, where we will likely either see a sharp pullback, or significant appreciation. Watch out for a strong four-hour close above 10,807 as a signal we are due to see another major leg higher for the index. 

Dow rallies into key resistance zone

The Dow Jones managed to temporarily break above the crucial 18,257-18,264 resistance zone yesterday, providing a somewhat mixed picture for the index. Given the creation of higher highs and lower lows, we need to see the next move to gain confidence of the short-term trajectory.

That said, the wider picture portrays a market which is rolling over. As such, we could be seeing a deep retracement of the sell-off seen on the October 11.

Watch out for resistance around the 18,300 mark (76.4%) should we see another leg higher.

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.