Key index levels: technicals for FTSE, DAX and Dow

The strength seen in European indices yesterday appears to be waning a little today. Signs of slowing, if stabilising growth in China have given the bulls some pause.

Tuesdays have become synonymous with equity upside so expect to see profit-taking today as we await a raft of data from the US, including ;manufacturing purchasing managers index, new home sales and earnings updates from big name stocks like Apple and Facebook. The markets may be a little circumspect for now, especially as we approach the recent highs in some indices.

6680 anchoring FTSE price action

The FTSE managed a close above the 6680 last night and price action seems anchored around that level for now. Above all three major moving averages, breaking through yesterday’s highs of 6707, will put the bias on additional upside. The 6730-40 region has acted as a congestion zone in the past for the index, and it is this level that will be the pivotal area between current price action and the highs seen in late February.

Dow progresses towards 16,600

The Dow Jones ran out of steam at 16,570 yesterday, so we will be watching this level today. The daily relative strength index suggests there is still some momentum left. As we make progress towards the 16,600 level, one has to question whether this major resistance point will see profit-taking or short-selling set in.

In a 560 point range since mid-February, any concerted break above the 4 April highs (preferably on a weekly close) will have many market participants training their eyes on the 17,000 metric.

Having registered as overbought on the four-hour and one-hour chart, we are seeing consolidation with the 16,500-10 region supporting the intraday and the 50-hour MA providing rising support at 16,476 below this.

DAX unable to move above 9600

That trendline resistance from the January highs continues to be a sticking point for the DAX. Unable to keep above the 9600 in early trade despite the better manufacturing and services PMI data – we would need to see a break through 9720 to negate this barrier.

Good overall support comes from the confluence of the 50- and 100-DMA around 9460. Price action is garnering bids from the 76.4% retracement from the 4 April highs to the lows seen on 15 April. Any deviations below would target the 50-hour MA at 9530.

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