Levels to watch: FTSE, DAX and Dow

All global markets are now back in action after various holidays, and the mood is verging on positive. Despite the UK elections this week and pivotal events in Greece the market is holding up relatively well. 

Data on a screen
Source: Bloomberg

FTSE could test 7100

Hopes that the FTSE 100 might yet continue its move lower have been, for the moment, dashed. Back inside the 100-point range of April, the market is now aiming to consolidate above 7000. A close above here today would signal that we may be in for another test of 7100. If the price fails to hold 7000, then the downside scenario comes into play, with a possible move back towards the 6900 area and then the rising trendline off the December lows, which comes into play around 6850.

Upside moves will be limited unless and until we can break 7100 and close above it on a daily basis.

DAX's RSI lower

The DAX’s elegant descent continues, after yesterday’s low-volume bounce took it back above 11,600. A failure to hold this area signifies that the sellers are in control once more – the relative strength index and stochastics on the four-hour chart have both turned lower, with a first target of 11,400 and then on to 11,000.

Any more sustained bounce could see the index move back to the top end of the current descending channel, around 11,740, but with the oversold bounce having been worked off it looks like the most obvious direction is down. There have been false dawns in the DAX before during this retreat, and we may have seen another.

Dow eyes 18,100

The move back above 18,000 will provide some comfort for Dow Jones bulls, but the index must build on this to move back above 18,100 if it is to sustain the move.

Beyond 18,100 the target is still the all-time high, while a failure to hold this zone would send the index back towards the 100-day SMA at 17,858, and thence to 17,800. Below 17,800 the index targets the April low around 17,600.

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