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Key index levels: technicals for FTSE, DAX and Dow

Markets appear to still be in wait-and-see mode, profit-taking ahead of the European Central Bank decision tomorrow.

FTSE sees significant dip

The FTSE 100 has dipped quite substantially past the 6830 level, and while below this metric tends to set up a return to the key support around 6770/80.

This may culminate in a potential double-top formation which, as mentioned previously, would be likely to result in a textbook move back to the 200-daily moving average at 6655 in the medium term. One could expect to see a degree of settling around the 50-DMA at 6740 before any dramatic move to the downside.

The one-hour chart is in bearish mode too, with price action below the key moving averages and trading in down the trending channel from the 6880 highs. Resistance now resides at the 6830 in the intraday and, with the positive divergence on the same time frame, we may see a test of this level prior to a move lower towards 6800.

A move back above 6860 is needed if we are to get a move towards the all-time highs.

DAX anchored to 9900

The DAX is also fairly anchored around the 9900 level and the 200-hour moving average. The daily doji on 2 June has been followed by two days of losses and this, along with the relative strength index on the daily chart going from overbought to below the 65 level, is something of a classic reversal pattern.

A decline through 9900 (daily close) sets up a return to 9812 while rising support from the 50-DMA and the bullish channel from mid-March should also support the price action.

Intraday resistance is at the 9830/40 levels.

Dow sticks to 70-point range

The rounding off in most indices is evident in the Dow Jones too, but even here weakness is only likely to lead to modest losses, with 16,600 being the first line of support. A trading range of around 70 points seems to have been established, with the floor at 16,690 having held secure so far this week.

On a daily chart, recent tests of the 50-day moving average have been short-lived, suggesting that buying pressure still exists as and when an opportunity presents itself.

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