FTSE stuck below 50-DMA
The move through 6750 yesterday signals a willingness to move higher, although the FTSE now finds itself stuck in something of a no man’s land, below the 50-day moving average but above the 100-DMA.
A recovery of the 20-DMA would be the best sign for more gains, ideally followed up with a move through 6800, which would then put the all-time highs back in focus.
The daily relative strength index is moving higher as well, and other momentum indicators appear to be confirming the strength of the move, while the intraday charts show the 50-hour moving average moving through the 200-hour MA, another positive indication of the general direction in this market.
Further gains expected for DAX
The German index’s bounce has carried it back through 9800, and although it now sits just below the 20-DMA and 50-DMA the momentum seems to be firmly on the side of further gains towards options expiry on Friday.
It now falls to the DAX to break through the highs just above 10,000, and prove that this barrier is not insuperable. Only then can we say a definite move higher is in progress.
Support should now be found at 9700 and then the 100-DMA, currently at 9647.
Dow targets 17,200
Any bull worried about the direction of markets at present need only look to the Dow Jones for reassurance. While the S&P 500 is floundering below 1980, the big name index is still recording new closing highs.
Ultimately it seems that 17,200 is still the Dow’s destination for now, with the usual dips allowing entrance points for those willing to take them as they appear.
Any drop back would run into the 20-DMA, which has done sterling service as a support line over the past eight weeks or so, but even a drop towards the 50-DMA would not completely endanger the rally.