Key levels: technicals for FTSE, DAX and Dow

What a difference a day makes. The markets have ignored weak manufacturing data from the eurozone and China, choosing instead to focus on US manufacturing.

The catalyst alluded to in yesterday’s analysis is finally here – whether the last day of the week will result in profit-taking remains to be seen.

Dow breaks above 50-DMA

We have now seen a rally in all indices, with the Dow Jones futures pointing to a break of the 50-daily moving average. Above 16,110/15 there does appear to be a propensity for a move higher in the coming days, with 16,300 still something of a target. Any drops below 16,110 would put the Dow on the path towards the next support of 16,050.

The one-hour chart is showing a little divergence on the relative strength index (RSI) but any intraday pullback should be confined to the 100-hour moving average and the 16,090 level.

FTSE slightly overbought

The FTSE 100, led by the Royal Bank of Scotland, has not quite managed to target the highs seen on Jan 21/22, and the daily RSI is registering as slightly overbought. Should we end the day lower at 6810 it would see a gravestone doji develop, so next Monday’s price action will be crucial. A down-day would indicate that a correction is expected next week.

The bullish channel in place from July 2013 is still very much there, with rising support coming in at 6450, but the overhead channel resistance – in line with this year’s highs at 6876 – may still be considered a target for now. Any moves through this may well run out of steam at 6900.

Near-term support comes again from the 50-hour moving aberage at 6793 then 6770 – then 6710.

DAX range-bound

The DAX remains caught in a range with 9670/80 causing trouble for the bulls and the 9590 level providing support. Any rise through the top targets 9790/9800.

A break of 9591 with a daily close puts the 9470 level in sight.

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