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Levels to watch: FTSE, DAX and Dow

European indices are attempting to break back into a more bullish phase as the Dow breaks out of falling wedge.

Trader looking at chart
Source: Bloomberg

FTSE triangle continues to hold
Friday saw FTSE price action once again return to the bottom end of the symmetrical triangle that has been in focus over the past month. Early trading has seen the crucial 6603 resistance level hold up and this will be key to determining the state of play going forward.

A move above 6603 would bring an expectation of a move back to 6636 which is not only the next major resistance point, but also reflects the approximate middle of this triangle.

For now, I am in a wait and see mode given the low created on Friday and thus an intraday close below 6580 would likely bring a move back to the lower boundary of this triangle, whereas a break above 6603 would bring expectations of a move up towards 6636.

FTSE 100

DAX at major resistance zone
DAX is attempting to regain ground around the crucial descending inside trendline which has capped price action a number of times in recent months. Much like the FTSE, this chart also has a major near-term resistance (11,094) that is currently being challenged to create a new intraday high.

A break above 11,166 would complete a short-term double bottom and thus would point towards the 11,425 area. Thus for now, I am bullish for a move back towards 11,166, yet should this occur, the focus will be on how it responds. A selloff could look like a short-term rangebound consolidation whereas a break above 11,166 would point towards 11.425.

DAX

Dow breaks out of wedge formation in bullish move
The Dow Jones has broken above the descending trendline that has been in play for a month now. I always favoured an upside breakout given the bullish primary trend and the fact that a falling wedge in a downtrend is typically bullish.

However, the difficulty is in knowing when it will happen and on this occasion it is possibly already happening. I say possibly because trendlines are easily broken, whereas the crucial thing is to create a new high. That means that while we are above this trendline yet below 17,630, I am more neutral.

Given the near-term creation of a higher high and higher low, I would say it is more likely to rise than fall, yet my preference would be to wait and see. Near-term support is expected around 17,465, with resistance at 17,549, 17,630 and crucially 17,686.

Dow Jones

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