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. See full non-independent research disclaimer and quarterly summary.
The recent moves in equity indices have been explosive and while we have seen a mixed bag of earnings and macro data, it seems that a pause for breath, as we approach the European Central Bank and Bank of England rate decisions as well as the non-farm payrolls later this week, appear to be the measured approach for now.
FTSE clings to 6500
Having closed at 6587 yesterday, the 100-week moving average is, like yesterday, creating a barrier to upside for the FTSE this morning. Up around 0.2% in early trade, the index is clinging to the 6500 level.
With short-term price action in a bullish channel, and while above the 50% retracement from the mid-September highs to the recent lows at 6070, there remains a chance that the index will retest yesterday’s highs. A break through the 6560 level puts us on course for a move towards the 50-day moving average and through 6600.
A move back through 6540 would see the index decline towards the 6400 level.
DAX supported by 9230
The DAX continues to find a degree of difficulty in breaking the 50-DMA and the 61.8% retracement level from the September highs around the 9300 level.
Having stalled around the 9340 level yesterday, intraday support now comes from 9230 with the 100-hour MA coming in below at 9197. A break through the top side of this range would target 9587.
Dow RSI overbought
Striking new highs yesterday, the Dow Jones is taking a breather below the 17,400 level. The bounce back since the ‘correction’ has been practically parabolic in the US benchmark, so it wouldn’t be unhealthy to see a minor pullback in the near term.
The daily relative strength index is registering as overbought so we may see the Dow consolidate within a tight range, with 17,315 at the base and the recent highs at 17,428 the area to watch if we are to see additional upside from here.
The hourly RSI is still indicating a degree of negative divergence, but only a move back through 17,212 and the 100-hour MA would argue for a move back through the psychological level that is 17,000.