Levels to watch: FTSE, DAX and Dow

Having touched fresh highs yesterday, markets have eased this morning. Concerns over the Greek deal, which seemed such a sure thing, and profit-taking, have conspired to push indices into the red.

US trader working
Source: Bloomberg

Quick turnarounds are the norm at the moment, and we have seen one in recent days. It is mainly down to Greek deal hopes and the rising price of oil, which continues to enjoy a good run. The FTSE 100 is back testing its old enemy, 6900, while the DAX is struggling to hold gains around 10,900. US markets seem to offer greater upside, even if the rising dollar clouds the picture.

FTSE eyes close above 6900

One suspects that any close above 6900 on a daily basis will be rapidly followed up with a move through the 1999 high of 6934. Until then however, the problematic 6900 area remains as major upside resistance. The daily relative strength index continues to trend lower, potentially flagging up a negative divergence (where the price has made new highs but the RSI has not).

Support lies around 6725, and then at 6680, the 200-day moving average. The hourly chart sees a rapid pullback from the 6900 area, taking the price in the direction of the 50-hour moving average. The three-day uptrend is still intact however, with rising support at 6790.

DAX still overstretched

As with the FTSE, we have seen the DAX touch new highs while its daily RSI slips lower. The index still looks overstretched, even given the positive fundamentals, with a gap of around 800 points between the price and the 50-DMA.

DAX watchers should still keep an eye on the rising trendline on the hourly chart, with support found around 10,750. Pullbacks have been ideal opportunities to catch this DAX trend, but with the index looking so stretched the question is; will anyone have the courage to buy in?

Dow price action above 50-hour MA

Another sharp move on the Dow Jones will have caught out the trend followers again, as the index punches back to the 50-DMA at 17,667. Buyers would like to see a close back above this level, which then gives the index another shot at the December peak.

The hourly chart has seen the price shoot above the 50-, 100- and 200-hour MAs, stalling for the time being at 17,650. An easing back of the hourly RSI should be watched as it may provide a decent potential entry signal, especially if accompanied by a bounce from the 50- or 100-hour MAs. 

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