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Technical analysis: key levels for FTSE, DAX and Dow

Record high index levels have practically become a daily event for the Dow Jones, thus there have been questions asked as to why the FTSE 100 has failed to deliver in the same way.

Chart
Source: Bloomberg

FTSE 100 pushes through 100-DMA

If anything is going to permit the FTSE 100 to return to its all-time highs, set back in late 1999, it’s mergers and acquisitions activity. No surprise then that bid speculation surrounding engineering firm Meggit, has pushed the blue chip index higher in early trade.

The FTSE has pushed through the 100-day moving average – an area that was capping gains for the past few days. So, a daily close above the 6770/5 level would put it on course for a move back through the 6800 level, and certainly make an attack on those all-time highs more credible.

The 100-DMA should now act as the overall support metric and a move back through the 50-DMA would then target the 6830 levels. Daily relative strength index certainly looks to have momentum presently.

Intraday, the RSI is looking a tad overbought so we cannot rule out a pullback towards the 200-hour moving average at 6755/60.

DAX capped at 50-DMA

The DAX is capped by the 50-DMA, yet the current momentum in other indices may well puncture this metric today. Near-term resistance above this lies at 9890, but a breach of this would put us back in the trading range with 10,050 at its peak.

Currently testing the 100-hour moving average, the RSI is showing that there is strong momentum behind the current move. Support comes in at 9750 with the 9613 coming in below that.

Dow Jones pushes higher

The Dow Jones continues to push higher, shrugging off the marginally hawkish comments from Janet Yellen yesterday, and adding to its recent gains on the back of better-than-expected earnings from the US financial sector.

The wedge pattern being formed from those April 2014 lows, does tend to suggest that as the price action moves into an even narrower range, a retracement could occur.

We have seen new highs established at 17,118 and one could expect that a run towards 17,140 could occur today, especially given the heavy macro calendar.

Bearish divergence can be seen on the hourly RSI chart, which is also indicating that in the short term this market is ever so slightly over-exuberant.

Any declines should find support at 17,090 and then 17,050 without upsetting the overall bullish trend.

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