Levels to watch: FTSE, DAX and Dow

Indices did indeed spend the day filling in the gaps caused by Monday’s open, with a particularly impressive performance in the US.

US trader
Source: Bloomberg

FTSE could drop to January lows


The bounce back above 6500 proves that this is the level that sellers need to beat to keep the downward move in progress. For the bulls, we are waiting for a move back above 6600 that then clears the highs of last week around 6650. I fear that the presence of Greek news in the headlines will contain progress.

A close below yesterday’s low of 6450 would mean that the FTSE 100 is heading towards the January lows around 6300. 

DAX could challenge 11,500 area

Although it succeeded in repeating last Monday’s trick, the DAX still failed to breach 11,000. This is the litmus test for any continuing rally; a failure to break above here will target the 200-day simple moving average at 10,666. DAX bulls should be careful, since below here there is very little support until we near 10,000. Such a move would wipe out almost all the gains for the year.

If we can get back above 11,000 then we are watching for a break through the 14-day EMA (11,134), and then on to challenge the 11,500 area that saw the late June rally stall. 

17,800 level crucial for Dow

US indices stormed back yesterday, posting bullish crossovers on daily stochastics. However, the Dow JonesS&P 500 and Nasdaq 100 have yet to break through the highs from last week. For the Dow, the 17,800 level is crucial – a close above here would signal that the index may have mustered the strength to move on and attempt to break the 50-day SMA around 17,990. The 200-day SMA at 17,723 continues to hold, so any drop today may find support here.

A close below would target 17,600, key support from March, April and during last week, while a more sustained move lower heads towards 17,200 and the January lows. 

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