Levels to watch: FTSE 100, DAX and Dow

FX considerations continue to play a key part for indices, with FTSE 100 outperformance and Dow underperformance coming amid a weak pound and strong dollar. 

FTSE 100 continues to grind higher

The FTSE 100 remains in a bullish phase, with the index enjoying a significant boost from a weak pound of late.

The Bollinger band appears to encompass much of the price action, with the majority being confined to the upper zone of the band. With that in mind, there is a strong likeliness we will continue to see the price shift higher, where a break below the middle Bollinger band would point towards a potential move into the lower boundary of the Bollinger. However, such a move could actually represent a buying opportunity, and a bearish outlook would only come with a break below the 7334 swing low.

DAX continues to consolidate below key support

The DAX remains below the crucial 12,611-12,649 resistance zone, with the reaction to this area crucial to determining where we go from here.

With the previous drop below the 12,376 swing low, there is a chance of another move lower from here. However, we would need to see a break below 12,517 to provide a bearish view. To the upside, look for an hourly or four-hourly close above 12,649 to provide a bullish outlook.

Dow looks set for further downside

The Dow Jones sold off sharply from the 76.4% retracement yesterday, bringing about a heightened chance of further downside from here.

The important bearish signal came with the drop below 24,190, thus negating the recent creation of higher lows. As such, while we could see short-term gains, it is likely that such a move would be a retracement of the 24,501-24,122 sell-off. As such, look out for potential shorting opportunities around the 61.8-76.4% Fibonacci resistance zone of 24,356-24,411. A break above 24,501 would negate this bearish short-term outlook.

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