Levels to watch: FTSE, DAX and Dow

Indices move into a consolidation phase, following on from last week’s trending market. Thus a breakout is required for the next directional play.

Data chart
Source: Bloomberg

FTSE continues to range
The FTSE has been providing a much more rangebound market so far this week, in stark contrast to the trending price action of last week. This morning is seeing price move back towards the lower thresholds of this range, where 5843 represents the key support level of this pattern. Also be aware of the 5864 level, which represents the December 2015 low.

However, overall the 5843-5940 range is expected to holds unless we see an hourly close above 5940 or below 5843 to provide a more directional bias to the index. Above 5940, resistance levels of notes are at 5969, 6000 and 6011. Below 5843, the support level of note is the August 2015 low of 5768.

DAX showing signs of resurgence
The DAX appears to be showing some signs of life following on from a major selloff earlier this month. Much like the FTSE, we are seeing a range being adopted for the early part of the week, yet this comes off the back of a rally yesterday morning, which provides a different picture. With that in mind, it is well worth watching out for a possible close back above 9979 to provide a bullish outlook for now.

The medium-term outlook remains bearish, yet given the somewhat oversold nature of global markets, some form of recovery could be in the offing. A close above 9979 would look towards 10,039 and 10,121 in the near-term. Alternately, a close below 9776 would provide a more bearish tilt, with 9625 the next support level of note. 

Dow bounces from trendline support
The Dow Jones is rallying from trendline support this morning, in yet another show of continuation of the consolidation seen yesterday. With this in mind, further upside seems likely for now, yet a breakout would be required to provide the signal for another directional move in the index. Thus a closed hourly candle above 16,464 would provide a bullish view, with resistance levels of 16,700 and 16,759 the next levels of note. Alternately, a closed hourly candle below 16,230 would provide a more bearish view, with 16,179, 16,161 and 16,008 the next key support levels.

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