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Levels to watch: FTSE 100, DAX and Dow

Short-term weakness is unlikely to undermine the bullish trend for the Dow, while the FTSE 100 and DAX are looking increasingly likely to break higher.

IG Analyst

Publication date : 2018-07-30T09:21:13+0100

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FTSE 100 heading higher from trendline support

The FTSE 100 is pushing higher following a fall into trendline support, as the index continues to create higher lows within a month-long period of consolidation. Despite a range being in place since mid-June, the index is taking on a more bullish outlook.

The continued creation of higher lows is also accompanied by tentative breakouts to the upside, with the price hitting the highest level in five weeks on Tuesday. With that in mind, it is likely we will continue to push higher from here, where a break above 7741 would continue to strengthen the case for a bullish breakout. Conversely, a fall below 7640 would signify a likely short-term sell-off towards the bottom of the range.

FTSE 100 chart

FTSE 100 chart

FTSE 100 chart

DAX pushing towards 76.4% resistance

The DAX has broken through the 61.8% Fibonacci resistance level, with the 76.4% level coming into play. Given the retracement into the 61.8% and previous resistance at 12,769, there is likely to be further upside to move into that next resistance level.

Given the previous respect of the lower Fibonacci level, we need to see what kind of reaction we get to the 76.4% level. Respect of that level could point towards a bearish phase coming into play. However, should the price rally easily through resistance, we could be heading towards the 13,184 peak.

DAX chart

DAX chart

DAX chart

Dow pullback unlikely to last

The Dow Jones saw significant downside to end the week, with the index failing to build on an initial trendline break.

This takes us back towards trendline support, which would be likely to cap any further downside. Ultimately, as long as we do not see a break below 25,109, then further upside seems likely from here.

Dow Jones chart

Dow Jones chart

Dow Jones chart

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