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A week of less vital economic data means that the twin concerns of the eurozone have become the main worry for investors. After yesterday’s heavy losses in Europe, markets there are relatively quiet, with little lead to follow from what was an indecisive session on Wall Street last night.
FTSE 6800 level brings out buyers
The 6800 level continues to bring out buyers for this market, although the continuing decline in the relative strength index indicates that upward pressure is still weakening.
A close below 6800 is still the event that bears are looking for, having been scrupulously denied over the past week or more. The levels 6680 and then 6600 are the targets on the downside, while upside gains are still likely to be contained by the 6900 area.
DAX targets 11,000 area
In the case of this index, dips towards 10,600 continue to be bought, even if the firm downward slopes of the 50- and 100-hour moving averages point to a market that is still weak.
A daily close below 10,600 would, in my view, open the way to something of a more serious drop, including a target of 10,200 and then the 50-day moving average.
As with the FTSE, the upside target is still the same as it has been for the past week, namely the area around 11,000, although this is far less of an obstacle for the DAX than the FTSE’s equivalent recent high.
Dow could find support at 50-DMA
Even the Dow Jones has now settled into a 100-point range, a sharp contrast to the wide swings we saw throughout January. The 17,700 level has been support for the past 24 hours, while the 17,800/50-hour MA area has held back any attempt to rally in a meaningful fashion.
Further support may be found around the 50-DMA at 17,670, while we are watching for momentum indicators such as the RSI and stochastic momentum index for any sign that the bounce from the 200-DMA has run its course.