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Key index levels: technicals for FTSE, DAX and Dow

As the week gets underway, markets are heading lower, with the post-non farms euphoria rapidly fading. 

FTSE testing 6800

Having registered as rather overbought on the daily relative strength index in the past few trading sessions, the FTSE has retreated and is now testing the 6800 marker.

Friday’s price action threw up a rather bearish candle (practically a dragonfly doji but not quite) which suggests, that as we near recent resistance levels, the bulls have lost some of their swagger. The key support now comes from the low of this candle at 6776.

Unless we break the 6840 highs or the support mentioned above, we may remain in this range.

A break through the bottom of the range targets the 6750 (200-hour moving average) and a break through the top would see the index challenge the February highs.

Dow supported by 50-DMA

The Dow Jones has manifested similar price action to its UK cousin, the FTSE. An inability to break and close higher in the aftermath of the better-than-expected payrolls number, coupled with the fact that the index failed to even muster support to make an attack on the intraday highs witnessed on 4 April, puts the index into the correction/rangebound zone.

Currently above the 16,500 level, one should closely watch for any declines through this metric.

Decent support comes from the 50-DMA currently at 16,365, and that should assist the market if it decides to take a trip below yesterday’s lows of 16,374. These lows coincide nicely with the 38.2% Fibonacci from the 11 April - 2 May low/highs. A break-down of this level would see the 16,302 level targeted in short order.

A close above 16,570 is needed if we are to break towards and above 16,600 with any conviction. 

DAX finds resistance at 9555

With the DAX, the 50-DMA has also rescued the downside so we will watch for any fresh attempts at the 9400 level. Resistance at 9555-60, then 9600 and the trendline resistance from the January highs remain the bug-bear of the German benchmark.

A break through the 9600 level targets 9645.

The one-hour chart shows a bearish development with the 50-period MA crossing the 200-MA from above.

Any push below the 9500 targets 9400 then 9366. 

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