Levels to watch: FTSE, DAX and Dow

Markets are having a slow start to the session this morning, after a downbeat end to Tuesday’s trading on Wall Street.

A man looking at data
Source: Bloomberg

Last night’s weak finish in the US took the shine off what was actually a good session for UK and eurozone markets. European indices continue to feel the benefit of quantitative easing, which is also making its presence felt in the UK. The Federal Reserve’s likely policy direction continues to cause some worries for US investors, although I suspect the knee-jerk reaction to what was a rather modest CPI print yesterday afternoon will quickly fade.

FTSE’s upward trend remains

This index saw fresh intraday highs yesterday, and continues to find support at the 7000 zone. For now price action continues to be capped by 7050, but so long as the index remains solidly above 6960 and the 14-day exponential moving average (EMA) the outlook is bullish.

Admittedly the FTSE 100 has moved below the 13 March uptrend line, but dips towards the 100-hour simple moving average have so far been bought. Overall the trend remains upward in the hourly, four-hourly and daily timeframes.

DAX in consolidation phase

The DAX brushed the 14-day EMA yesterday and once again this technical dip brought out the buyers. The index remains in a consolidation phase on the daily chart, but a close back above 12,000 today would lend weight to the theory that this consolidation is coming to an end. The daily stochastic momentum index may be about to stage yet another bullish crossover and should be watched closely this week.

On the four-hour chart the index is looking like it is about to break out of a four-hour bull flag formation, with a breakout from here pointing towards a test of the all-time high above 12,200.

Dow Jones returns to 18,000

Two days of declines have carried the index back toward 18,000 but the outlook still looks reasonably optimistic. If the index continues to hold above 18,000 then the bulls are still in control. Only a move back all the way to the October trendline would really put the upside case in jeopardy.

For the time being the index is finding support on the 50-period EMA on the four-hour chart. Should this hold then we look for another attempt to break 18,200, and then on to the all-time highs. 

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