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Levels to watch: FTSE, DAX and Dow

Greek deadlock has indices on hold, with fundamental and political factors set to dominate the next direction.

A trader working on a computer
Source: Bloomberg

FTSE 100 reverses on 6975 and looks to break lower

Yesterday’s strength in the FTSE 100 was short-lived, with the 6975 resistance point I mentioned providing the turning point for the next move lower.

The gradual deterioration overnight has turned into a strong move lower this morning which, having moved below yesterday’s low of 6901, provides a bearish outlook. Any further move lower would look towards 6867 as near-term support, followed by 6808. However, for now we are looking for a close below the ascending trendline as a bearish indicator.

Bearish divergence between the weekly MACD and price action points towards a possible move lower of sorts, and with the Greek cloud hanging over global markets, we could see further downside for the time being.

With the Bank of England rate decision today, there is also the possibility of some sort of volatility off the back of the statement.

DAX primed for liftoff, while we await Greece resolution

The pullback in the DAX to the descending trendline, dating back to April, has provided a great buy signal in the index. However, for now there is a clear lull in the markets as traders try to decide whether they want to be long or short coming into the resolution of this Greek deadlock.

I do think we will see some sort of last minute resolution to allow Greek bills to be paid, and while I do not generally trade fundamental news, the existence of two crucial trendlines of support makes me feel that from a technical outlook, we are set to move higher.

For now, we are likely to see consolidation continue, but I am bullish unless the price moves below 11,250.

Dow looking bullish despite weak start

Yesterday saw a jump higher in the Dow Jones, following the spinning top candle on Wednesday which hit the ascending trendline support.

Bullish turns higher in the MACD histogram and stochastic point towards a move higher in the near future, and given yesterday’s intraday break above 18,093, I expect this initial selloff to reverse higher in the near future. The 18,000 level seems the most likely area for this to happen. Should this happen, I am looking for a return to 18,170 and 18,208. My bullish outlook holds unless the price breaks below the 17,915.

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