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Levels to watch: FTSE, DAX and S&P 500

The recovery from the lows of last week appears to have run its course, unless we see further gains today. 

Data trader
Source: Bloomberg

FTSE 100 at a crucial point

Thursday’s bounce pushed gamely on into Friday’s session, but now we are at a ‘make or break’ point. The first lower low was established on Thursday, down towards 7390, and if the FTSE does turn lower from 7500 (having tried to break above it in the pre-market period), then we have a new lower high.

Short-term support can be found at 7450, 7400 and then 7380, with the latter also around the rising trendline from the April low. Significant support lies around 7260, 7190 and then the all-important 7090, which has held all year. Any rally needs to clear 7500 to then push on and challenge the all-time highs at 7540.

DAX still in an uptrend

All eyes will be on the 12,660 area today. This was vital support just over a week ago and the limit of the bulls’ ambitions on Friday.

If it holds as resistance a move back to 12,517 and then 12,408 could be on the cards, with the 50-day simple moving average (SMA) in sight at 12,325. The DAX still needs a close below 11,900 to create a new lower low on the daily chart and really suggest the trend has shifted. 

S&P 500 – what next?

After the bounce on Thursday and Friday, the question is, what now for the S&P 500? Gains faltered below 2390 at the end of last week, around the same point that acted as resistance in Wednesday’s session before the market suddenly fell. Bulls need to get the price back above here to stand a chance of reclaiming the 2400 level.

Conversely, a failure would signal that the sellers appear to be in charge, and that a lower high has been created on the daily chart. Real bearish action may only develop if we see a drop back below 2370 support and the 50-day SMA at 2369. From the looks of it, bullish momentum has been unwound, but short positions should still be approached with care. 

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