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

Indices rebounded on Friday, but have shown some indecision this morning, compounded by a lack of news. 

Data trader
Source: Bloomberg

FTSE 100 defending crucial levels

Last week was the tale of the FTSE’s battle to hold the post-November rising trendline. As of this morning, the bulls are still winning here. The trendline and the 7300 level were both stoutly defended, while the percentage of members above their 50-day simple moving averages (SMAs) fell to its lowest level since November. This indicator has begun to rise, and as long as the trendline holds the potential for a bounce is still extant.

Intraday, the index bounced off the 7300 zone on Friday, but has run into trouble around 7385, where bounces stalled all week. A close above the latter level is needed to maintain upward progress, while a close below 7300 would put the index on a bearish footing, opening the way to 7260 or lower. 

DAX going from oversold to overbought

The DAX held the 100-day SMA at 12,382 last week, with support around 12,300 holding on 6 July, as it did on 30 June. Having gone from oversold on Thursday to overbought today intraday, we may see the index struggle to make further headway, but as long as 12,300 holds bulls may continue to step in.

The buyers need to clear 12,500 to confirm forward momentum, having seen the index stall just below this level throughout last week. Above 12,500, 12,660 and 12,881 come into play. A close below 12,300 is required to open the way to the likes of 12,200 and 12,032.

S&P 500 needs to clear 2430/2440 area

As at the end of June, a dip last week towards 2408 brought out the buyers on S&P 500, with the 50-day SMA at 2415 providing a buying opportunity. A stumbling block to further upside progress was provided by 2430/2440 last week, so the index needs to clear this area, and then break the downtrend line off the June highs around 2453.

A close above 2447 would negate the sequence of lower highs that has prevailed for the past month or so. Bears need to break 2400 in a meaningful way to suggest a deeper correction is in play.  

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