Levels to watch: FTSE, DAX and S&P 500

Oil rumours have fueled a bounce across the board. Sceptics might decry the rally as built on shaky foundations, but it appears to be holding for now.

Source: Bloomberg

FTSE 100 continues to follow current channel

Perhaps we have seen a bottom, at least for the time being. It’s remarkable the FTSE 100 has been so obedient in following the lines set up by the current descending channel.

Sustained price action above 5600 would incline us to be more bullish, at least in the short-term, with targets around 5637, and then on to 5770.

A lower turn, with a move below 5550, would signal the bounce has run its course, but we would wait for movement below 5500 to signal that the bears really are in charge once again.

DAX improves but optimism remains low

The optimism seen on the FTSE is not being displayed on the DAX so far this morning, but it still looks better than earlier in the week.

The firm bounce off the lows yesterday put the index back above 8800, the precursor to any move through 8900 and then on towards Wednesday’s intraday high of 9100.

With a US holiday looming on Monday, volume-light trades at the opening of next week will afford bulls the chance to make hay, if only for a day.

Any drop lower needs to clear 8700, which would raise the possibility of a move to 8521.

S&P 500 holds firm

Last night’s rally may well be purely down to an oil bounce. But the price action saw the index hold firmly above the crucial 1819 area that marked the low of October 2014.

Ideally a move above 1850 is needed to confirm a bounce is in play, in which case 1870 and then 1890 become the areas to watch for resistance.

Failure to hold 1834 today raises the possibility of a move to 1819, and then down to the lows of the week around 1812. 

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