The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
FTSE uptrend intact
The daily bullish channel, intact since October of last year, indicates that should we see a rise through the 6900 level, that this will be a shoo-in in the near term.
Examining the price action in the aforementioned channel, the average range from top to bottom has been around 7.2% and the time taken to get there has ranged from three to five weeks.
Since bottoming at 6500 in mid-April (one month ago), the FTSE has risen around 5.75% leaving a little slack and indeed time for additional upside if the target is to be met.
The daily relative strength index is looking rather overbought, however, and we may be seeing the semblance of a double top on the same indicator.
The uptrend from the 14 April lows is intact, and one would expect that the previous resistance around the 6845 level should act as support with the 6800 level coming in below that.
Any pullbacks through the round number target 6770.
DAX supported by 50-hour MA
At long last the DAX has made strides through the downtrend from those January highs, leaving it now acting as a support around the 9700 level. Naturally markets will now be looking towards the 10,000 level from this juncture. The weekly bullish channel here, in play since June 2012, is very much intact so a rise through the January highs of 9800 would set us in good stead for a move towards the upper band of this channel – currently 9880.
Beware the negative divergence on the same timeframe which could indicate a pullback prior to a significant leg upwards.
The 50-hour moving average is supportive for now and any declines through this would see a return to rising support just above the 9700 point.
Dow could see profit-taking
It took the Dow Jones a mere six days to gain 378 points from the lows below the 16,400 level to where we currently reside, and five consecutive days of gains could result in some profit-taking today.
There is more negative divergence on the Dow from a weekly and daily perspective, yet the clamber through the 16,700 level, having left the recent highs in its wake, could indicate a consolidation for now.
The base around 16,650-60 should support action if the 50-hour MA (16,706) is breached. Below that lies 16,632 and major support comes from the 50-day moving average at 16,406.
As always, a break through the new all-time highs (16,730) will probably invite more bulls on board as the 17,000 level expectations get bandied about to a greater extent.