Levels to watch: FTSE, DAX and Dow

After Friday’s drubbing for indices, markets have recovered as pre-Christmas cheer returns.

Source: Bloomberg

FTSE 100 eyes 6150

Even with the rapid drop at the end of last week, there is still hope for a festive rally. In early trading there is already an indication of this, with the move back towards 6100 underway.

The 50-hour simple moving average at 6078 has already been broken, and a close above here on the hourly chart would suggest the index is on its way back to 6150 and then 6195.

The 6000 mark continues to hold as support, so we need to see a move through here to give the bears some Christmas sustenance, with a target around 5874. 

DAX could target 10,200

A strong recovery in Europe this morning has reversed Friday’s bearishness, as seasonality kicks in here too. The real target now is 10,816, near the descending trendline for the year, with a move above here targeting 11,000.

If the index really gets into a festive mood, the highs of December around 11,400 might not be too far-fetched.

A move below 10,500, Friday’s low, negates this, with a target towards the month’s low of 10,200.

Dow could drop towards 17,100

US futures have recovered somewhat, putting them back above 17,200, giving hope that a bounce may be underway.

However the Dow Jones has plenty of lost ground to make up, with a move through the 50-hour SMA at 17,422 the really important move.

Until then, it looks as if this is merely an oversold bounce, with a drop back towards 17,100 the indication that more losses are on the way.  

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