Technical analysis: key levels for FTSE, DAX and Dow

Markets seem to be shrugging off any geopolitical issues, reaching higher, and by and large moving on hopes that monetary stimulus from the European Central Bank is a done deal.

ECB logo
Source: Bloomberg

The yields on safer assets (particularly European bonds) have dropped considerably, indicating that the Mario Draghi move is being priced in and is helping to bump up demand for riskier assets.

FTSE could target 6780 level

The break through the 200-day moving average puts the FTSE in good stead for a move higher. With the 6700-05 level now set to provide a degree of support, the market is currently toying with the trendline from the June 2012 lows. A close through here would target 6780 then 6830.

Any pull backs beneath the 200-DMA might put the FTSE on the back foot and see a revisit of the 6650 levels.

The inverted head and shoulders pattern on the one-hour chart is still working with a textbook target of 6750-60, so we may see a degree of consolidation for now until we break the Friday intraday highs at 6743.

50-hour MA supporting DAX

The DAX is also making inroads to shaving some of its recent losses. Last Friday’s highs of 9325 should be closely watched, coinciding with a test of the 100-hour MA – this level will need to be overcome if a challenge at the 200-DMA is to be witnessed. Between this metric and current price action lies 9415.

The 50-hour MA, residing around 9130, is supporting at the moment – any drop below this takes us back to the lows of last week around 9045.

Dow testing 16,730 level

The testing of the 16,730 level is in full swing for the Dow Jones. The 100-DMA is now supporting price action with the 16,600 level just beneath that. A daily close through 16,730 puts us on a trajectory towards the 50-DMA at 16,844.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.