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Levels to watch: FTSE 100, DAX and S&P 500

The DAX and S&P 500 remain bullish, but the picture for the FTSE 100 remains less encouraging.

FTSE 100 recovers from the lows, for now

The FTSE 100 rallied sharply off the lows of yesterday, gaining over 80 points. But having seen lower highs since the test of 7000 last Friday, a short-term bearish view is reasserting itself.

A close above 6920 is needed to suggest the buyers are back in charge, and a lower high below 6900 on the intraday chart would provide further evidence that the longer-term downtrend from August is back in action. This would suggest a push back to 6800, and if this is broken, then a deeper retracement towards the 6520 lows of December.

DAX keeps up the momentum

Here the picture seems more promising for further gains, the DAX having stabilised around 10,800. It is now seeking to move through 11,000, the area that held back progress over the past week.

The price is now in the zone around 11,030 that provided support in October and November, until the December drop broke through the zone.

S&P 500 clears 50-day moving average

Yesterday’s close took the S&P 500 above the 50-day simple moving average (SMA) for the first time since the beginning of December. But this time around, it comes off the back of a steady push higher, rather than a gap up over a weekend.

Having cleared the October-December zone around 2620, the index now targets trendline resistance from the October highs. Dips continue to be bought, as yesterday’s bounce off 2600 showed.

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