Levels to watch: FTSE, DAX and Dow

Prospect of a Greek deal boosts indices, yet with such significant initial moves, there is a possibility of a fade later into the session. 

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Source: Bloomberg

Inverse head and shoulders formation sees FTSE break higher

The FTSE appears to be in a recovery phase, following the break above 6752 this morning. That level represented the neckline of a head and shoulders formation and followed on from a higher low set on Friday. The target derived from the formation comes in at 6870, which coincides with the peak on 11 June.

As we stand, the price looks likely to reach the 6808 resistance which is a major May support level that has held twice. As such, I expect to see the bullish momentum start to run out of steam soon; however, the question is whether this marks the beginning of a more bullish phase of trading. 

DAX double-bottom points to further upside

In a similar manner to the FTSE, we have seen the DAX spike higher this morning, breaking to a ten-day high. The double-bottom formation we saw last week provides us with a projected target of 11,436 which corresponds with both the 11 June high and 23.6% Fibonacci retracement. As such, I will be looking at intraday charts for any signs of reversal or continuation patterns as we move higher towards the 11,448 resistance level. A move above that level would be highly significant as it would mean a substantial swing high has been taken out and would point towards a move to 11,618.

Dow continues move higher and is likely to surpass Friday’s high

The Dow Jones is similarly moving higher, but to a lesser degree than its European counterparts so far this morning. With the completion of the double-bottom last week, things are looking relatively rosey for the US index given the lofty projection of 18,530. However, for the meanwhile, the price is expected to simply continue creating new highs and new higher lows which would necessitate a move above 18,170 and towards 18,208. I see this likely today and believe the US open will be highly bullish just like the European one. Thus I am bullish and expect to see further gains later in the session.

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