Levels to watch: FTSE, DAX and Dow

With indices rallying heavily this morning, the overall bearish view remains in play and thus reversal signs are worth looking out for amid this sea of green.

Data on screen
Source: Bloomberg

FTSE rallies from key support level

This morning is seeing the FTSE 100 bounce up from the absolutely crucial 5768 support level, which underpins the whole last four months of trading.

A convincing close below that level would bring expectations of yet another big move to the downside. However, instead we have unsurprisingly seen another move higher, which is likely to precede a move back down through 5768. A closed candle above 5853 signifies the creation of a double-bottom, which gives a projected target of 5969.

Overall the outlook is bullish for now, with price expected to turn lower once more from below the 6000 mark. Should that occur, the downtrend will remain intact for another move back down towards the 5768 support area.

Thus a short-term bullish bounce is preferred, with the medium-term bearish view remaining unless we see a closed candle above 6000.

Resistance levels of note are at 5878, 5902 and 6000, with support at 5853, 5843, 5812 and 5768.

DAX gains on double-bottom pattern

The DAX is also rallying heavily this morning, with the German index also creating a double-bottom formation.

However, much like the FTSE, we are seeing a clear downtrend in play and unless we see a four-hour close above 9942, the downtrend remains intact for another move back towards the downside.

The double-bottom projection provides us with a target around 9909, yet ultimately, it is a case of watching for bearish reversal signs below 9942 to continue the downtrend.

Resistance levels of note are at 9776, 9909 and 9942, with support at 9455 and 9410.

Dow rally unlikely to last

Yet again, we are seeing a strong rally in place for the Dow Jones, with a failure swing leading to a big move higher this morning.

Trendline resistance has the possibility of capping further upside, but ultimately, the key is to watch for a bearish reversal signal within short-term timeframes to continue the downtrend.

The key level to watch here is 16,483, which would have to be broken for the bearish view to be negated. Thus any further upside is likely to be sold into to continue the downtrend in play over the past month.

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