Levels to watch: FTSE, DAX and Dow

The indices look set to get back on trend, with FTSE, DAX and Dow all primed for a potential break higher.

Trader in the New York Stock Exchange
Source: Bloomberg

Awaiting next leg higher for FTSE

The FTSE is continuing to trade sideways, following on from the rally resistance on Friday. This provides us with greater confidence that the next move will be bullish once more. However, there is a threat of a retracement back towards the 6960 region. For now, price remains within a symmetrical triangle and the breakout will dictate the state of play.

An hourly close below 6986 points towards a retracement into the 6953-6969 support zone. Conversely, an hourly close above 7037 would point towards another strong move higher for the index. Irrespective of which happens, a wider bullish outlook remains in play unless we see an hourly close below 6927.

DAX breaks to 16-month high

The DAX is breaking through the key 11,434 resistance level this morning, following on from an ascending triangle pattern in play over the past two trading days. Given the rally into this level, alongside the bullish pattern, a break higher was preferred.

However, it is worth noting the 11,434 level is a massive point of resistance, marking the November 2015 swing high. As such, this break through the top could have significant bullish ramifications.

With that in mind, the potential of a fake-out is always worth taking into account. However, a bullish outlook is in place, with a break back below 11,378 required to negate this view.

Dow breaking out of triangle pattern

The Dow Jones has broken through trendline resistance this morning, as it seeks to break back in favour of the bullish trend once more. Despite the trendline being broken, the key bullish signal comes with an hourly close above 19,918; a level which is currently marking the high of the day.

As such, while a bullish outlook is in place, the 19,918 level will be key to seeing whether the index will extend higher in a meaningful manner following early strength. A break back below 19,851 would negate this bullish outlook.

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