Levels to watch: FTSE, DAX and Dow

We're experiencing a calm after the storm as markets wait to decide their next move.

Data on screen
Source: Bloomberg

FTSE pulls back following bounce

Yesterday saw the FTSE 100 recover much of Tuesday’s losses, yet was unable to hold on once price hit the 6070 resistance level. Ever since we have seen a gradual move lower, yet this appears to be a pennant formation, which is continuation pattern. This would highlight a possible move higher.

However, I will only be bullish for another move higher once we see a move above 6050. Until that happens, I expect to continue moving within this gradual grind lower.

Upside resistance would be expected at 6070 and 6123 in the case of a spike higher. Otherwise, a break lower from this pattern points to 5963. In the medium-term I remain bearish given the levels taken out earlier this week. This view will hold unless price moves back above 6170.

DAX attempting to claw back some of its losses

The DAX has suffered more than most, with the Volkswagen scandal really impacting the index in recent days. The creation of a new short-term high this morning comes off a new low and this highlights the indecision within this market.

Ultimately, I would only gain confidence of direction by seeing an intraday close above 9710 which would act as a good guide that we could see a move back to 9784. Otherwise, I would really need to see a move back below 9459 to gain confidence of the next move lower.

Over long-term I am bearish and believe we could see another big move lower in global indices, yet given the size of the selloff there is always a possibility of a bounce higher. Until those levels are breached, we could see lots more directionless trading between 9710 and 9459.

Dow gradually moving lower once more

The Dow Jones is moving lower, with the 50-hour SMA providing a good area of resistance to cap any upside. This seems likely to continue in the short-term and thus I am looking for a move back down to 16,162 as support and will remain bearish unless price moves above 16,340.

Unlike its European counterparts, the Dow still needs to take out a major level (16,162) to look particularly bearish. Thus should we return to that level it will be crucial as to whether its broken or not.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.