Technical analysis: key levels for FTSE, DAX and Dow

A bounce back in US equities on Friday afternoon is having a residual effect here in Europe today. 

Data on a screen
Source: Bloomberg

Tensions appear to have eased somewhat, but one must question whether the current bounce is sustainable or if it is down to an element of profit-taking and consolidation before it sees an additional leg lower. 

FTSE edges back above 6600

Last Friday’s bullish candle coupled with the daily RSI pulling back from the oversold zone has seen the FTSE move back above the 6600 level. The 6587 level – 61.8% retracement from the January lows to the May highs – should now act as support. As yet unable to move back above the 6620 level, this area will need to be overcome if the 50% retracement at 6646 is to be challenged. A move through here targets 6675.

The 100-hour moving average is capping the gains for now so we may see an element of consolidation before the next direction is actually decided.

The 6530 lows provide the key support for now.

Dow moves towards 16,600

The Dow seems to be providing similar signals to the FTSE and price action has moved back into the longer-term trendline support, with the daily RSI also rising from its slump into the oversold zone. We have seen highs of 16,588 so far this morning, so any push through 16,600 will see the 100-DMA at 16,667 targeted.

Any retreat below 16,500 takes us back to 16,446 with the 200-DMA providing the key support on the daily chart.

Price action has risen through the 200-hour MA, although intraday the moves looks a little overbought.

DAX daily RSI no longer oversold

Daily RSI on the DAX is also beginning to shuffle back from oversold. While above the 9080 level there remains a possibility of a move back towards 9173 then 9215.

The hourly chart may be forming an inverted head and shoulders pattern so a break through the 9170/80 level could see this completed. The 100-hour MA is supporting intraday at 9080/5. Any pull backs through this metric target 9040.

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