Levels to watch: FTSE 100, DAX and Dow

US markets are leading the way higher, with the Dow looking set for new highs. However, European markets are some way off that, with the DAX still attempting to break free from its recent downtrend.

FTSE 100 board
Source: Bloomberg

FTSE 100 pushing higher after wedge pattern

The FTSE 100 is pushing upwards in the wake of a bullish wedge breakout seen yesterday. Upside for global markets in the wake of the US midterm elections has provided European stocks with a bullish impetus, reversing the declines seen throughout the first half of the week. This brings about a strong chance of a continuation of the rally seen in the last week of October.

Given we have pushed through the first swing high of 7141, it looks likely we will continue to gain ground, with any losses seen as a temporary move unless we break below 7026.

DAX back into major resistance zone

The DAX has rallied back into the 76.4% retracement level this morning, as the index seeks to form some sort of base for a recovery.

However, that Fibonacci resistance level also coincides with the 11,692 level, which is the head and shoulders breakdown level provided by the March period. As such, the ability or inability to break through that level is going to be critical in determining where we go from here. Beyond that, the index needs to break through the 11,852 level to provide a more bullish short-term view.

Dow rebound points towards record highs

The Dow Jones has broken from its recent downturn, with the index rallying sharply off the back of the midterm election result. Ultimately, the weakness seen throughout October looks like a retracement of the 23,992-26,952 rally.

As such, with that retracement over, it looks likely we will push up through that 26,952 mark once again in the near future. Thus, a bullish outlook is in place unless we break below 26,076, with any near-term weakness being seen as a buying opportunity.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material 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 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. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Find articles by analysts