Levels to watch: FTSE, DAX and Dow

Dow Jones and DAX punch higher despite Greek woes.

Source: Bloomberg

FTSE finding it hard to hold gains
Yesterday saw yet another spinning top candle created, highlighting the indecision evident within the FTSE 100 at the moment. The release of the UK consumer price index figure this morning (9.30am London time) is likely to drive direction for the early part of the session.

Given the move off the lower threshold of the ascending channel in play, I am expecting to see a bullish move from this current phase of consolidation. However, the creation of multiple indecision candles doesn’t fill me with confidence so early in the move higher. The choppy stochastic movement highlights the difficulty of trading this current phase as we are not seeing a clean reversal higher.

Nevertheless, I am bullish while price is above 6882 and believe we will see 7065 in the coming days. A move above 7020 will be an important first step to that.

Surprise DAX breakout points to return of the bulls
While I always expected to see the DAX breakout towards the upside from this descending channel formation that has been in play over the past month, I didn’t expect it to happen whilst the Greek drama was still so up in the air. Nonetheless, yesterday’s break higher has seen substantial strength in the early part of today’s session and points to a likely move back towards the 12,050 and 12,410 resistance levels.

In the meanwhile, we’ve got the 50-day simple moving average to deal with first which is likely to provide near-term resistance. However, the intraday charts show an inverse head and shoulders which was completed this morning and the projected target of 12,100 is consistent with the swing high from late April – 12,082.

I will await intraday dips to buy in at a better price for the move towards 12,100 and 12,408.

Dow reaches record highs
Yesterday saw the Dow Jones resolve its short-term consolidation between 18,284 and 18,208, closing at a new all-time high on the daily chart. Today has taken on that mantle and we are seeing an early spike higher. I am caught in two minds about this move.

Firstly, a breakout is always the kind of move people wait for to see a strong move higher. However, in the past we have often seen the Dow sell off soon after creating a new high. Therefore I am cautious.

I am bullish – but I’m watching closely for a sign that we are going to start selling off again. I think we are highly likely to see a day in the green today though, and am watching for period of short-term retracement to gain a better price for the move higher. 

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