Levels to watch: FTSE, DAX and Dow

Another crucial day for global indices, as the FTSE and DJIA attempt to figure out whether to push through important resistance levels or reverse lower.

German stock exchange
Source: Bloomberg

FTSE asks question around crucial resistance

The FTSE 100 has been pulling back from 6024 resistance, which represents the November low for the index. The gradual pullback seen overnight has taken us to the 5946 support level with price now moving higher, with the 5978 representing the current resistance being challenged.

Ultimately, we are at a crucial inflection point for the FTSE, with historical and trendline resistance coming into play following on from a major rally. If we are going to continue this downtrend that has dominated recent months, we have to see the index turn lower very soon.

Thus be on the lookout for any further signs of weakness, with a closed hourly candle below 5946 pointing towards further downside. Alternately, a closed candle above yesterday’s high of 6033 would be a strong sign that we could challenge the crucial 6126 resistance level. 

DAX gradually gains

The DAX continues to gradually move higher. However, with price currently around the same levels as yesterday’s open, it is clear that the market is awaiting the directional bias which will be provided by the pivotal moves in the FTSE and DJIA.

From a purely technical consideration, this chart continues to grind higher and thus a bullish outlook remains unless we see an hourly close below 9348. However, given the major levels in the correlated markets, it is worth being aware of those too.

Support levels of note are at 9410, 9348, 9302 and 9254. Resistance levels of note are at 9563 and 9623.

Dow neckline to determine outlook

The Dow Jones continues to mull over whether to break through the critical 16,511 double-bottom neckline, where a break higher could lead to a significant appreciation for the index. Alternately, given the downtrend in 2016 to date, this would be a typical area for another move lower.

Yesterday’s weakness highlights the importance of this area and thus we are awaiting to see if that was simply a short breather before another move higher, or something more bearish. As such, a closed hourly candle below 16,388 would bring a bearish outlook for the Dow, with support levels of 16,278, 16,242, 16,203 and 16,109 in view.

Alternately, a closed four hourly candle above 16,511 would provide some confidence of a potential bullish breakout, with 16,626, 16,700 and 16,759 the next resistance levels of note.

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