Technical analysis: key levels for FTSE, DAX and Dow

Markets are retreating this morning, shedding some gains from Friday, as geopolitical risk remains high on the agenda. 

Financial data on screen
Source: Bloomberg

FTSE just holding steady

The FTSE’s bounce back through the 200-daily moving average on Friday relieved fears that the index was in for further falls, but the index will need to move back above 6800 soon if it is to avoid another dive lower akin to last week.

For now the 100-DMA is holding, but the 20-DMA has capped progress to the upside over the past four sessions and at some point one of these two averages has to give way.

The relative strength index is off its lows, but so long as it remains below 50 it seems difficult to think that this market can rally further. Any drop lower should be contained by the 6700 level and the 200-DMA for the time being.

DAX buyers step back in

Worries over the Ukraine situation caused the DAX to drop back towards 9600 this morning, but once again the buyers have stepped back in. As with the FTSE 100, the 100-DMA is doing a good job of supporting the market, but only a close above the 50-DMA would really send the signal that the market is moving back towards 10,000.

On the downside the 200-DMA would be a natural area to look for support should the DAX fall back through 9600.

With moving average convergence-divergence, stochastics and RSI all pointing lower, the downside scenario still seems to be the dominant theme for now.

Dow strength continues

The continuing theme of strength in the Dow Jones is remarkable when set against the lack of progress made by the FTSE and DAX. Futures this morning have rallied from their lows, and once again the 20-DMA is doing its usual job of holding up the market.

Thus the upside case remains in force, with a look towards the highs of last week in the direction of 17,150. The uptrend off the April lows remains intact, so any weakness in the direction of 17,000 and even slightly below that does not really imperil the rally.

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