Key index levels: technicals for FTSE, DAX and Dow

Markets have started the week on the back foot, with red numbers flashing up across Europe.

London Stock Exchange
Source: Bloomberg

FTSE bias to the downside

The triple test of 6880 has given way to heavy losses, and the fact that the index is not yet oversold indicates there is more downside to come.

It is probably too much to suggest that 6500 will be retested in coming weeks, but it seems the 200-day moving average around 6700 is the bulls’ best hope of a respite. Having dropped through the 50-DMA at the end of last week, for the first time since mid-April, the main bias appears to be on the downside.

On an hourly chart, 6750 is holding for now, although barely, and this could mark the end to the selling for now. However, a descending 200-hour moving average signals the broader short-term direction, with only a push to 6850 suggesting another turnaround is taking place.

DAX uptrend intact

It seems more positive, but not by much, with the index having bounced from the lows of Friday, with support now forming around 9827. Upside gains should be capped by the 9960 level at the moment.

On a daily chart, it does seem that the Germany 30 is still in an uptrend from its April lows, which would indicate that, on a longer-term basis, a retest of 10,000 is on the cards.

Dow supported by 16,630

Although it has dropped back like other indices, the Dow Jones should see support at the 50-DMA from technical traders, which suggests 16,630 as the first area of support. 16,700 is now the base on an hourly chart from which any rally will be constructed, while in the next 24 hours we would need to see a breach of the Friday high at 16,790 and a close above 16,800 before the rally can be said to have restarted.

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