Key index levels: technicals for FTSE, DAX and Dow

There are a few items on the macro calendar today that could play well into the euro doves who expect the ‘full monty’ from the European Central Bank next month – broad-based asset purchasing. 

A surprising increase in German unemployment along with the growth in M3 money supply, coming in at a mere 0.8%, does tend to suggest that the ECB should act at this juncture.

Naturally this, along with any interest rate cuts, would be very bullish for equities.

FTSE could target 6885

Above the 6830 level the FTSE may make an attempt at the 6885 region, while below that we will once again be watching that 6770-5 level for any penetration to the downside. This would likely result in the market falling back for a test of the 50-day moving average at 6735.

On the shorter-term chart, the price action is above all three major moving averages so a push through the 6860 level would help cement a move higher. There is decent support coming from the 50-hour moving average.

A break through 6896 would be the push needed for the 7,000 level in the medium term.

DAX tops out

In its fifth consecutive week of gains and up 3.6% since 21 May, the Germany 30 seems to have topped out at the 9970 level for the time being. Therefore, we would need to watch the previous day’s lows of 9872 to act as support should the market retrace further from its present position around 9930.

The daily and four-hour relative strength index is overbought and starting to turn down; likewise the distance from the 200-DMA is suggesting that we will see a lower price prior to a move to the big number of 10,000. I refer again to the negative divergence displayed on the weekly RSI.

Shorter term, the 50-hour MA at 9908 may act as buffer to the downside with 9785 coming in below that. Having reached the top of the bullish four-hour channel, a decline towards the 9770-80 level would not upset the overall trend.

Dow price action flattens

In a strong bullish channel since November 2012, the price action on the Dow Jones has flattened at the 16,736 level, so a move through here would be rather bullish and would put the index in a position to target 16,860. Support comes in at 16,624 and then 16,600.

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