Levels to watch: FTSE, DAX and Dow

FX moves in China are having their impact on the FTSE 100, while euro strength knocks the DAX and dollar weakness aids the Dow Jones.

US trader
Source: Bloomberg

FTSE could see resistance at 6800

The sharp drop seen so far this morning, after yet another test overnight of the zone around 6750, shows how indecisive the index is at present. For now, we wait to see if the index can hold 6650; a break below this area would suggest that we have seen the uptrend run its course, with a move back towards 6500 now possible.

If the index turns around and moves back above 6700, then we look to see if it can move firmly through the 6750/6760 area, with more resistance likely around the 6800 peak from mid-July.

FTSE 100 chart

DAX eyes 11,600

The index continues to show hesitation around the 11,600 level, which is acting as the high water mark for the time being. If bulls cannot manage a close above this level soon the risk to the downside increases. Initial support is possible around yesterday’s lows of 11,450, with the 200-hour SMA at 11,454 coming into play as well. Below this, the index targets 11,250 and then on to 11,150.

A break above 11,600, ideally with a daily close above this level too, would throw open the possibility of a move towards the July high around 11,820. 

DAX chart

Dow could head to 17,800

Yesterday’s strong move has been eroded slightly, but with a bullish crossover on daily stochastics and a weakening US dollar the outlook looks good for further gains for the Dow Jones.

A first step is a move back above 17,600, which would then suggest a move back in the direction of 17,800. 

Dow Jones chart

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