Levels to watch: FTSE, DAX and Dow

Many questions are being posed for the indices, with potential breakouts hitting key resistance. Will we see those initial bullish signs follow up or will we turn lower once more?

A trader on the NYSE
Source: Bloomberg

FTSE breaks higher, yet falters at key resistance

The FTSE managed to break through trendline resistance yesterday, yet fell short when attempting to break to a new high. The 7033 level provides us with a line in the sand that must be overcome for the bullish sentiment to prevail. For now, we are seeing the index pull back from that level and movie towards the key 7000 and trendline support convergence.

We would need to see an hourly close below 6975 to provide a more bearish outlook. Otherwise, an hourly close above 7033 would provide a bullish outlook. 

DAX weakening following doji into resistance

The DAX is in a very similar situation, where this week’s rally has moved into the crucial 10694 resistance level despite breaking through the triangle resistance. Both markets are a great example of why swing highs are more important than trendlines as a breakout signal.

As such, a bullish view only comes into play with an hourly close above 10694, whereas a bullish view comes with a closed hourly candle below 10588.

Dow wedge points to possible downside

The Dow Jones has been seeing relatively choppy price action over the past month, with wide swings in either direction. Yesterday saw a bullish break from a triangle formation. However, we are seeing a previously notable trendline come back into play as resistance, thus limiting upside for now.

This current bearish wedge brings into play a potential scenario that this current rally is merely a retracement of the sell-off from the 18405 peak. As such, while we could see further upside for the short-term, there is a good chance that we could see the sellers come back in before long.  

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