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Levels to watch: FTSE, DAX and Dow

Indices have retreated this morning, after a Federal Open Market Committee meeting that was viewed as disappointing in terms of equity market risk appetite.

A trader looking at a screen
Source: Bloomberg

It was never going to be a very exciting Fed meeting, and the statement released by the US central bank very much confirmed the existing position. Janet Yellen’s Fed remains ‘patient’ on rates, which implies a June rate increase at the earliest, while it noted that US economic performance was improving.

The reaction in markets was swift, with a selloff developing that saw gains from earlier in the day swiftly disappear. With the positive sentiment from the European Central Bank fading and Greece still in the headlines it looks like a more cautious atmosphere will prevail for the time being.

200-hour MA supporting FTSE

The FTSE has seen three days of losses but it still has yet to break through the lows seen on Monday. If a break below 6740 does occur then it will be clear that the sellers are back in control, with a possible target of 6620 in the first instance.

The 200-hour MA around 6750 is providing support for the time being, with the first daily support from today’s pivot point being found at 6710. The uptrend off the January low for the index has run its course, although any pullback is unlikely to move far below the 6400 area.

DAX could slip to 10,515

The 10,600 level is still holding this index up, having been resolutely defended yesterday. Buyers have again stepped in to hold the line this morning, but a close below here would first target the 10,515 area and then the 10,200 zone.

DAX bulls can still point to the fact that the hourly uptrend is intact, with only a move through 10,470 really negating this rising support that has underpinned the January rally in this index. Any move higher must close above this week’s all-time highs above 10,830.

Dow could test 200-DMA

Wild intraday swings have been the norm throughout January on this index and yesterday was no exception. For the moment 17,200 is holding as support, although it looks increasingly likely that we will have a test of the 200-day moving average in short order.

A daily close below 17,200 would set alarm bells ringing, even if the 200-DMA currently coincides with the mid-December low around 17,070. There is quite a bit of air below the 200-DMA that might result in a swift dive in the direction of 16,800, if not further.

On the upside the index needs to clamber back above the 100-DMA at 17,370 and then on to the 50-DMA at 17,700. 

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