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Levels to watch: FTSE, DAX and Dow

Europe has started to look increasingly unsteady, with indices coming under pressure following further poor economic news.

A man walking past a chart
Source: Bloomberg

This is having its effect on the FTSE too, and while there was yet another positive close on US indices last night there were signs that even here the rally is losing momentum.

FTSE rally losing momentum

The FTSE is being drawn back again and again to the 100-hour MA, hugging tightly to this in a manner that seems to suggest that the upward rally is running out of steam.

The 6650 level is providing some resistance for the time being, while the daily relative strength index is pulling back in a manner that mirrors the action seen in the DAX’s daily RSI. The 6560 level, the 50-day moving average, is possible first support, and then beyond that 6520.

Going back to the hourly chart, we have not seen a test of the 200-hour since 4 November, so this will be the first event to watch for.

DAX could test 9150

The DAX is probing 9200, where buyers stepped in over the previous two days. If downward momentum is sufficient to break below here then we are expecting a test of 9150, with the bearish crossover of the 50- and 200-hour MAs being reinforced by the 100-hour crossing below the 200-hour as well.

The daily RSI and SMI indicators are both moving solidly lower, so the modest pullback that we have been waiting for may finally be in progress. Further downside targets lie in the direction of 9000 and then 8900.

Dow fails to move higher

Is the Dow Jones finally topping out for the time being? It does seem to have become increasingly indecisive, with an attempt to break 17,700 yesterday being stymied.

An overbought reading on the daily RSI may finally be having an impact, although confirmation will be needed in the form of a close below 17,530.

The 50-hour MA is coasting just above the 100-hour, and with the 200-hour not too far away the index may be about to break lower. A first line target would be 17,500 and then 17,420.

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