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However, based on the past few days and the new record highs seen in US indices, the tendency to drift sideways to higher is still the likely scenario.
FTSE could target 6575
While the 6600 level has been a barrier to upside over the past couple of trading sessions, now that price action has punctured this level it should act as support with the 50-hour moving average and 61.8% retracement coinciding. A move through 6630 targets 6650 and the 100-day moving average, but the key level to breach on the upside is the 200-DMA at 6689 – the FTSE 100 has not traded above this level since the last week in September.
This level would also mark the top band of the bullish H1 channel and will likely present a great deal of resistance. H1 relative strength index is showing a degree of negative divergence so on the intraday we may see a rangebound action between 6630 and 6000 in advance of the next leg up. A breach of the 6000 level targets 6575.
DAX eyes 200-DMA
Having established a move through the 61.8% retracement level at 9300, the German benchmark is struggling to overcome the downtrend resistance from the 9890 highs, as well as the 100-DMA. A move through 9437 is required if the DAX is to shake off the current consolidation and make a break towards the 9520 level and the 200-DMA.
Daily RSI is not overbought but shorter-term, the index is running out of steam at the 9400 level. A move through here targets 9437 while 9350 supports on the downside. A move down through here takes us back to 9330 with the H1 rising trendline support coming in at 9305.
Dow RSI overextended
There seems to be no stopping the Dow Jones or indeed the other US indices. The divergence between European indices and those stateside is remarkable and really tends to underpin the state of the respective economies.
Having added 1.6% since the beginning of November, the Dow is on course for the 17,700 level. Daily RSI is looking a little overextended but the rising support from the 50-H MA has provided a floor this week so any pullbacks through 17,600 should bounce at 17,581. Should this metric fail then we may see the 100-H MA come in to lend a hand at 17,540.