Levels to watch: FTSE, DAX and Dow

Relative calm has settled over equity markets this morning, after the SNB’s dramatic move yesterday. Understandably it will take time for the effects of yesterday’s events to become clear, but nervousness is certainly the dominant emotion so far today. 

Charts on a board
Source: Bloomberg

Yields on US government debt continue to fall, as the flight to safety trade finds renewed adherents. The Swiss index is in retreat once again, as the full impact on Swiss businesses becomes clear. However, the DAX is holding up above 10,000 as it continues to outpace its cousins the FTSE 100 and the Dow Jones.

In time the shock from the SNB will subside and attention will shift to the big event next week, the European Central Bank meeting. Expectations are high now that quantitative easing is on its way, but be wary of a potential ‘buy the rumour, sell the fact’ trade as markets sell off in the wake of any ECB meeting.

FTSE eyes close above 6500

The FTSE 100 finds itself knocking on the door of 6500 once again, a level that has proven too much to break through over the course of the past week.

A close above this level would target the 6570 area, and then the 200-day moving average at 6670. The recovery in the daily relative strength index over the last two days lends strength to the idea that we may be seeing the beginning of a tentative rebound, although the indicator has yet to move above the 50 mid-point.

On the downside support is still being found around 6350, the dip below this area having been bought yesterday. Thus this area is the bottom end of the current trading range; a close below here could target the December low around 6200.

DAX above 10,000

After a very volatile session yesterday the DAX recovered well and pushed above the 10,000 mark for the first time this year. Although off the highs the steady uptrend that began at the beginning of last week is still intact.

The target on the upside is the high from yesterday around 10,050, with a close above here on a daily basis taking the price back towards the December high around 10,100.

Immediate targets on the downside lie around the 50-DMA at 9730, followed on by the 200-DMA at 9580.

Dow below 100-DMA

The Dow Jones has moved below the 100-DMA this morning, with further weakness looking likely in the direction of the 200-DMA at 17,040. The daily RSI continues to decline, although it has yet to push into oversold territory.

A turnaround would need to see a close above 17,400, with a target of the 50-DMA at 17,700.

On the hourly chart the price has pushed below 17,300, the lows from 6 December, and any move below 17,200 targets the low from mid-December around 17,100. 

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