Levels to watch: FTSE, DAX and Dow

An absolutely crucial day for global indices, as the FTSE and DJIA reach important resistance levels that could either make or break the recent rally.

Data

FTSE within crucial resistance zone

The FTSE 100 has seen a very strong rally throughout this week, bringing price into the 6024 resistance level that seemed likely to cap such upside momentum.

However, despite this bearish bias, we have not seen any signs to say that this market is topping off and thus a bearish reversal sign would be required to negate the bullish view that has dominated the week.

We are currently seeing a period of overnight consolidation and thus the breakout will be very clearly defined, with a closed hourly candle above 6033 or below 6000. The crucial hurdle that needs to be taken out for the medium-term picture to change is a break through 6128 which is the next major resistance point.

However, if that doesn’t happen, there is a good chance we could see sellers come back into the fold at these levels.

FTSE

DAX to retrace yesterday’s big move?

The DAX is moving gradually lower this morning, off the back of a blockbuster of a rally yesterday. Unlike the FTSE, the DAX does not necessarily have any crucial level in close proximity that would signal a more bullish medium-term mindset.

Thus we are taking the lead from the likes of the FTSE and DJIA. From this chart, we can simply say that we continue to trade in a convincing upward trend over the past week and there are no current signs to say that this is set to come to an end.

As such, any downside would look like a retracement rather than reversal, unless we saw a move back below 9130. However, given the potential for a reversal in the FTSE and DJIA from a technical perspective, there is also a chance we could sell off heavily from here. It is also worth noting that the last time we saw such a strong rally was the Friday-Monday rally which that was concluded by a very choppy retracement.

As such, we could see some downside come into play today, yet further developments would be needed to gauge whether it is anything more longstanding.

Support levels of note are at 9302, 9254, 9194 and 9130. Resistance levels of note are at 9455, 9563 and 9623.

DAX

Dow hits crucial double-bottom neckline

The Dow Jones hit an absolutely crucial resistance level overnight, with the index touching the 16,511 double-bottom neckline as shown on this four-hour chart.

This morning is seeing the index sell off and this will have to be extended for our bearish medium-term outlook to hold. Thus this chart could hold the key to the other markets as we hit both the expected 6024 reversal point in the FTSE, alongside the double-bottom neckline in the Dow.

This view would become negated with a closed hourly candle above 16,511, yet until that happens, there is a good chance we could see sellers come back into play here.

Key support levels are 16,278, 16,242 and 16,203, with resistance levels of note at 16,511, 16,626 and 16,700.

DJ

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