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

Friday’s late bounce has been followed up by early gains, raising hopes that the weakness towards the end of last week was just a passing phase.

FTSE 100 aims for 7200 again

The FTSE 100 fell back from the 7200 area last week, once again failing to break this area of resistance that held in fourth quarter (Q4) 2018.

However, given the surge off the lows of December, the index was looking overstretched in the short term. Friday saw the price eventually rally off the lows around 7060, and now we need to see the buyers push back towards 7170. Further declines below 7060 target 7014 and then 6900, followed by trendline support around 6900.

DAX holds above 50-SMA

Friday saw the DAX able to bounce off the lows, after it closed in on support around 10,820.

However, the break of the rising trendline from the December lows last Thursday suggests that a period of weakness is in store. If the index can hold the 50-day simple moving average (SMA) at 10,925 then a rebound may develop, but it will need to clear 11,050 to suggest further near-term strength. A close below 10,820 brings 10,570 and 10,230 into play as possible support.

S&P 500 bounces on trade talk hopes

While US markets staged a late recovery on Friday, S&P 500's gains for now have stalled around 2710. If the price can recover this then 2720 and 2740 are within easy distance. Near-term support sits at 2680, with 2630 below this.

Unless we see significant price action below 2660, then this looks more like a consolidation following the latest push higher rather than the beginning of a bigger correction.

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