Technical Analysis: key levels for FTSE, DAX, Dow

Markets are weak again, after a US session that saw the Dow Jones endure its heaviest losses in over a month. For the FTSE the picture is bleak but in others there is room for optimism.

A trader on the phone
Source: Bloomberg

6740 supporting FTSE

The loss of 6770 puts the emphasis back to the downside in the short term for the FTSE 100. At the time of writing the 6740 level remains unbroken, and I suspect this will hold as support for the time being.

On a daily chart the 100-day moving average around 6731 is the next level to watch, and then 6700 and the 200-DMA become key. A steady drop in the relative strength index over the course of May and June has really held this market back.

Only a close back above 6825 would really suggest the latest bout of selling has come to an end.

DAX struggling to hold 9900

It remains all about the 9900 level for the DAX, which is struggling to stay above here at the time of writing.

The April uptrend has been lost, a bearish sign in the short term, and here too we see broadening RSI divergence that makes a test of the 50-day moving average an evident possibility.

The low from 17 June around 9825 is now the level to watch, and a close below here signals a drop back to 9725.

Dow could find buyers around 16,800

Pre-open price action from the Dow suggests a wave of buying entering the fray around 16,800, and US markets may be the ones to put the markets back in a positive frame of mind. The volatility of the session on Tuesday, which saw early gains before steep losses, was the standout feature.

From looking at these three indices the Dow picture looks the most positive, and only a drop below 16,700 would suggest we are in for a period of extended weakness. If the index can recover 16,890 then it is potentially back on course for 17,000. 

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