Technical analysis: key levels for FTSE, DAX, Dow

European and UK indices have edged higher again this morning, after a startling rebound for global equity markets.

A man walking past a chart
Source: Bloomberg

FTSE eyes 50-DMA

The 50-day moving average is now the big hurdle for the FTSE, although it is now trading above the 20-DMA for the first time since 11 June.

If we can break through the 50-DMA, currently at 6810, then there seems an increasing likelihood that the 6880 level will be revisited. Still, until that is decisively broken it is hard to get overly-optimistic about the long-term prospects of the FTSE.

Nonetheless, the move upwards in the relative strength index signals  buying pressure is on the up, a necessary precondition for further gains.

DAX supported by 9828

The clearance of 9900 yesterday and the breaking of the 200-hour moving average sends a definite indication that this index is back on form.

All eyes now shift to the 10,050 peak from 20 June, as the index looks to clear the 20-day moving average as well.

On the daily chart, 9828 and then 9800 will act as support, with the 50-DMA coming into play as well, but there seems little suggestion that the Tyskland30 is in for any sustained weakness.

Dow could drift lower

The Dow Jones got to within a whisker of 17,000 yesterday, but it doesn’t look like there will be much time before the fabled number is breached.

Traders now have to play catch-up, and the result is we may see some drift lower in coming sessions, with some latecomers looking for better entry points. A drop back to 16,900 is possible, and even a fall to around 16,820 would not endanger the rally to any serious degree, as it would run into the rising trendline from the February trough.

Only a fall through 16,700 and then the 50-DMA at 16,690 would even raise the possibility of a more sustained dip for the index. 

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