Levels to watch: FTSE, DAX and Dow

Strong recovery sees indices regain ground as fundamental impact eases.

US trader
Source: Bloomberg

FTSE 100 hesitates following strong recovery
The FTSE saw a highly volatile week just gone, as the initial losses deteriorated into like-for-like gains in the second half of the week. That excitement could lead to somewhat of a hangover today with less fundamental drivers to push volatility higher. Initial signs point towards a challenge of the key 7065 level, which if broken could lead to an aim towards new highs. I do expect the price to close above 7065 and should that happen, a move to the previous highs of 7127 would seem likely.

DAX bounce back likely to fade
What a difference a day can make – the recovery seen on Thursday and, more importantly, Friday took the DAX from the lower end of a descending channel to the upper threshold today. This upper threshold also coincides with the March support region around 11,784 and the 50-day simple moving average.

With the DAX having traded within this channel for almost a month, I expect a continuation of this trend and thus am bearish for a move lower. Support levels on the way down would be expected at 11,600, 11,450 and ultimately 11,166. This bearish view would be invalid should price move back above 11,784.

Dow breakout signals bullish intent
Friday’s price action on the Dow Jones broke out from the symmetrical triangle that has been in play in recent months, bringing with it a more bullish outlook going forward. It is clear that there is resistance around 18,210, which represents the 23 March swing high.

Given this resistance, I would not be surprised to see price return to the upper levels of the triangle to test as new found support. Thus I am bullish, yet an entry around 18,120 would be preferable should we see a pullback today. I do expect to see price punch into a new high above 18,284 this week.

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