Levels to watch: FTSE, DAX and Dow

Strong buying makes new highs look likely for indices.

Trader
Source: Bloomberg

FTSE pushing to regain resistance zone
Yesterday’s inability for the FTSE to close above the key 7065 resistance level appears to have been a formality, with intraday candles showing higher highs and higher lows in the charge towards new highs.

Given the bullish sentiment returning to both indices and the dollar, I do think the status quo appears to be the order of the day. In line with that, I would not be surprised to see new highs being created over the next day or so. I still see a close above the 7065 resistance point as an indicator of that likely move.

However, it is easy to get carried away as a trader and try to jump in on a big move, which more often than not represents the end of it. Thus, I would say that be aware that all the volatility seen in European indices over the past week has come in the morning between 7-11am GMT. Following that we have seen prices retrace to give opportunities at a better price.

I would therefore consider it more worthwhile to place my trades late in the day at the retracement lows for the next leg higher in the following morning. That way I lessen the risk of getting caught buying at the top of a big move.

With that in mind, I remain bullish, yet would see any retracement back to 7070 as a more attractive entry than current prices. As ever, watch intraday for signs of a reversal of any retracement because while I am sure a retracement will soon come, there is no guarantees that buyers will wait until 7070 to get back in.

DAX spikes higher despite Greek woes
The impending threat of a Greek default doesn’t appear to have been having much of an impact upon the DAX this week as last week’s losses have begun to be taken back in style. Continued buying in the DAX shows little signs of letting up and I expect us to return back to the 12221 resistance level in no time. Given the size of the move this week to date, I would expect some sort of resistance around 12200. Consolidation and retracements will be seen as opportunities to get in at a better price.

In much the same way as the FTSE 100, the DAX generally sees volatility in the morning and I would expect to see consolidation come in the afternoon session.

Dow returns to trendline resistance
The Dow Jones has been trending higher over the past day following a bounce upon an ascending trendline dating back to October 2014. Ultimately we are seeing the same strength in indices that is evident across most major markets this week, yet for the Dow, the next challenge is rather near. With a descending trendline at 18170, followed by the 23 March swing high of 18200, a break above these levels would be a big bullish indicator.

Given that price is currently at 18133, these challenges are not far away and with the bullishness evident in global markets this week, I would not be surprised to see that break back towards the 18284 high happen in the coming days. However with the strength seen so far this morning, a consolidation or retracement for the US session seems likely.

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