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Levels to watch: FTSE, DAX and Dow

The Federal Reserve meeting has come and gone with little fanfare and not much excitement. PMI data this morning has been awful once again and for the moment indices are indulging in a period of weakness. 

Data on a screen
Source: Bloomberg

The minutes from last night showed that the Fed was broadly relaxed about the end to QE3, with little argument. Overall members still felt optimistic about the progress towards a healthier level of employment in the US.

However, in the eurozone all is not well and we are seeing some more noticeable weakness in European indices as PMI data came in below expectations. With options expiry tomorrow and Thanksgiving in the US next week, however, the picture still looks broadly supportive for equity markets.

FTSE hourly RSI oversold

Although still up on the week, the FTSE 100 is pushing back below the 200-day moving average once again. With a drop back below 6700 the index has worked off its overbought condition, and is looking for first support around 6640. Below this we are looking towards support near 6585 and 6540. Meanwhile on the upside the index will first target 6720 and then 6750 if the bulls can regain the upper hand.

On the hourly chart we are merely seeing a test of the zone just below the 100-H MA, taking us into oversold territory on the hourly relative strength index. So far this has been a good buying opportunity, with any rally higher targeting yesterday’s top around 6720, while a move lower first hits the 200-H MA at 6645.

DAX holds above 9400

The DAX finds itself trapped between the 200- and 100-day moving averages, below the former and above the latter. For the moment it is holding above 9400, with a break through the 200-DMA targeting 9620 and then 9800. On the downside we look to support at the 50-DMA at 9250 and then 9180.

The hourly chart shows an index in retreat from intraday overbought levels, and while it has dropped below the 50-H MA it remains above the 100-H MA. Bulls should probably remain relaxed unless the index breaks 9200.

Dow eyes 200-H MA

US markets are seeing their first noticeable losses in a number of sessions, but this should not unduly concern us. First support for the Dow Jones is around 17,600, followed by 17,550.

On the hourly chart, the index is probing around the 200-H MA, but as with other indices this has usually provided good support in recent sessions. A drop below this moving average would take us back towards Monday’s lows and then down to 17,500.

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