Levels to watch: FTSE, DAX and Dow

The Dow Jones’ selloff points to possible shortcomings of recent all-time highs, while European indices await the next leg higher.

A candle stick chart
Source: Bloomberg

FTSE 100 continues to grind higher with little conviction

This week has largely been a frustrating one for FTSE 100 bulls, for as much as we have seen the index creep higher, those gains have been minimal and there has been relatively more choppiness than actual daily gains.

This morning is seeking to see the index push on, with early gains being established. However, with the 7020 resistance in sight, we could simply see further indecision hit the market before long. One thing worth noting is that the 20-period simple moving average (four hour) has been propping up price action throughout the week, and that should provide a relatively reliable support level should we sell off again. I continue to be bullish for a move towards 7065, with a move above 7020 possible as a spark for a jump higher.

DAX consolidation continues, providing short-term ranging market

The recent upside breakout from a descending channel has provided us with a resumption of the bullish outlook that has dominated the early part of 2015. Today sees the index continue to consolidate in a rectangle formation which I believe will be a short-term phenomenon. With that in mind, I see anything between 11,785 and 11,800 as buying opportunities as we await the next leg higher. A move below 11,780 would provide an indication that we are going to retrace some of that recent move rather than just consolidate, and thus I would then be looking lower for a support level around 11,618. However, for now I am bullish and expect the current lull to be a precursor to another move higher towards 12,050 and 12,410.

Dow begins to sell off following short-term jubilation

Yesterday saw the Dow move back below the 18,284 support level and post an intraday lower low with the move below 18,261. That support level has now formed resistance and signs are pointing towards the possibility that the new highs seen this week may have just been fleeting. With that in mind, I am bearish while the price remains below 18,261 and especially 18,284. However, any move lower would have to contend with the 18,208 support level which if broken would then lead to a likely move towards 18,100.

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