Levels to watch: FTSE, DAX and Dow

Indices upside likely to be short-lived, yet impending FOMC decision means technicals are likely to be shaken in the near future.

US trader
Source: Bloomberg

FTSE bites back following sell off

The FTSE 100 is attempting to move into a more bullish mindset following a breakdown below 6123 earlier this week which saw price fall to both 6070 and 6023 support levels. For now price has broken above a short-term resistance trendline and is attempting to break higher from yesterday’s high of 6183. Ultimately we need to see a move above 6201 to give some confidence that the index could take on less of a bearish outlook.

However, with the wider picture continuing to create new lows I remain bearish on the medium-term picture. Thus for today, I await confirmation of a new high above 6201 which would then bring a likely move to 6220 as the next resistance level. However, should price fail to take the 6201 level, this could be a good spot to see a reversal lower, which I believe would be a significantly bigger move than any further upside.

Initial support levels to watch come in at 6150, 6123 and 6116.

FTSE 100 chart

DAX bounces higher from inside trendline

The DAX has bounced higher from an inside trendline following a breakout from the descending channel we have been watching over the past week. The sharp move higher is breaking through the 10,329 resistance level with ease and that points to further upside.

However, in a similar manner to the FTSE, the longer term picture is one of a market rolling over, with lower lows being created and thus while we are seeing upside, I would only be convinced that this is an indication of a longer term bullish trend if price moves above 10,524.

We are some way from that currently and one obvious resistance point which we could see this index reverse lower from is 10,378. Thus while I am open minded to further upside in the short term, I am more looking for bearish reversal signals around either 10,329 and 10,378.

DAX chart

Dow approaches triangle top

The Dow Jones continues to respect the ascending triangle formation that has been in play for almost a month. The ascending trendline is typically going to be the less reliable end of the triangle, as it is less clearly defined. However, the 16,700 level is very clearly defined as a resistance level and thus I am expecting some form of response.

As such, I expect price to move higher to 16,700 and for now am looking for a short-term move lower. Ultimately it’s a case of seeing how price responds to that level and taking your lead from there. An ascending triangle is typically bullish, yet until that breakout has happen, I expect the formation to hold. 

Dow Jones chart

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