Levels to watch: FTSE, DAX and Dow

Indices have rallied so far this morning, continuing the buying that began during the afternoon session yesterday. Bond market concerns have eased slightly, and this has tempted buyers back into the equity space. 

Data trader
Source: Bloomberg

FTSE still finding buyers
The bounce in the FTSE 100 from near 6900 yesterday confirms that buyers are still here. There is the possibility of another move back above 7000 should the Bank of England report today tend towards the dovish side of things. As before, such a move would make the outlook more bullish, but until we get a close above 7100 the lifespan of any such rally looks limited.

An immediate upside target is the peak from Monday’s session – around 7090. For now, dips towards 6900 should bring out the buyers, but a move below here would head towards last week’s pre-election low around 6810. The rally of recent months is still intact, but it is not looking particularly healthy given the extended period of consolidation that we have witnessed.

DAX looking bullish
Having bounced intraday yesterday around 11,400 the DAX now finds itself looking more bullish, even if it is now much closer to the top end of its descending channel. The index has now run into the 50-hour simple moving average (SMA) at 11,550, but a bullish crossover on the four-hour stochastic suggests the buyers are back in charge.

A first target on the upside is 11,700, with 11,860 being the next, and then on to 12,000. A failure to hold the 11,492 200-hour SMA would suggest we see another test of 11,400 and then back down towards the bottom end of the descending channel at 11,200.

Dow looks to break 18,200
Yesterday’s test of 17,950 brought out the buyers, and overnight futures have pressed higher. The Dow Jones is now back to the problematic 18,200 area, so we could see progress stall once more.

If momentum does continue, a move into fresh all-time highs would be on the cards. A failure to hold 18,100 would head back towards 17,950 and then potentially back towards the 100-day SMA at 17,870.

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