Key index levels: technicals for FTSE, DAX and Dow

If markets were cautious yesterday, today they are acting like a rabbit in the headlights, awaiting the European Central Bank decision.

FTSE pushes towards 6800

We’re seeing the FTSE 100 push towards 6800 again, as the selling action that has predominated all week keeps markets on the back foot. The 6770 level is still the one that needs to be beaten if bears are to see sustained moves lower, but ahead of the ECB decision the standard approach has been to ‘wait and see’.

Any break through 6770 runs into the 50-day moving average as well, which as I noted yesterday could provide an excuse for a pause in any downward move.

On an hourly chart we are once again touching oversold levels, as happened two days ago, but short-term traders need only look back to 23 May to see what happened the last time we approached 6800 –  a swift move upwards to retest 6880.

9940 capping DAX progress

After a better finish yesterday, the situation for Germany’s index looks slightly better than that for the FTSE. Again, round numbers are providing the guideposts here, with 9900 acting as a floor but any upward progress clearly capped by 9940.

Thus we look to the hourly chart to see what the next move might be. With the massive caveats provided by the ECB meeting, it seems like a rangebound trade between 9900 and 10,000 is the order of the day.

On the same chart, the 50-hour moving average has moved below the 200-hour MA, for the first time since mid-May, but only when the ECB meeting has concluded will we be able to say whether this is a short-lived development or a sign of a correction.

Dow targets 16,800

US markets finished off the lows too yesterday, but as with the DAX upward momentum has stalled ahead of the ECB decision. The problem of what Mario Draghi will do has kept markets within a narrow range all week, and today is no different.

For the Dow Jones, the 200-hour MA provided a reason for a bounce yesterday afternoon, and so long as the index remains above this indicator my view remains that further gains are in store.

US markets have led the way in recent weeks and 16,800 remains the short-term target, with the 50-DMA close to 16,500 being an immediate support level.

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