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Levels to watch: FTSE, DAX and Dow

European and US indices appear to be heading in alternate directions, with the FTSE and DAX looking increasingly bearish, as the Dow flounders.

German stock exchange
Source: Bloomberg

FTSE rallying after overnight consolidation

The FTSE 100 is pushing higher off the back of a short-term pullback overnight, with the price heading towards yesterday’s high of 7385. An hourly close above that level would provide a bullish signal for another leg higher.

Despite the price trading within a typically bearish wedge pattern, such a breakout would largely negate the formation. Conversely, a failure to break through 7386, followed by an hourly close below 7367, would provide a bearish outlook for a move back into trendline support (currently 7334).

FTSE chart

DAX pullback unlikely to last

The DAX is moving lower this morning, following a bullish triangle breakout overnight. For now, the trendline support is being respected, yet as long as we do not fall below 12,164, this pullback is seen as a buying opportunity.

It is worth noting the huge resistance level up ahead at 12,408, yet for now we look likely to continue gains until we get to that area. A break back below 12,164 would provide us with a warning sign of a potential impending period of weakness.

DAX chart

Dow continues to lag Europe

The Dow Jones remains a laggard among the indices, with the price trending lower since the 20,735 high on Tuesday evening. We have seen trendline resistance respected in that time, with the price needing to break through the 200-hour simple moving average (SMA) and trendline resistance if we are to see a resurgence.

Ultimately, we would need an hourly close above 20,735 to bring back a more bullish view for the index. Until then, this drift lower looks likely to continue.

Dow Jones chart

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