Levels to watch: FTSE, DAX and Dow

Indices are lacking a clear direction, yet a bullish reversal for the Dow Jones and a bearish reversal for the FTSE 100 are two short-term possibilities.

US trader
Source: Bloomberg

FTSE sells off from 6123 yet direction remains unclear

The FTSE has sold off from 6123 resistance on Friday and brought with it a question mark over whether we will see another selloff come to fruition. The failure to create a new high this morning is a signal that this could be impending, yet I would need to see a close below 6050 to gain confidence that we going to trend lower once more.

A one or four-hour close below 6050 would lead me to believe we will see the FTSE fall back to 6000 and 5950. Otherwise, a move above 6123 would point towards another leg higher.

However, the key level to the upside is 6170, which if broken would make the medium-term picture less bearish and possibly restore some of the confidence that markets have lost of late.

FTSE 100

DAX remains choppy following selloff

The DAX has been showing somewhat inconsistent chart trends over the past week, with new lows being matched by a marginal new high, thus pointing to a somewhat mixed outlook.

The selloff from around 9710 took price back to the 9532 support level and the subsequent bounce has to regain 9750 to make things look relatively positive for the index.

As things stand, the pair is trending higher, from the 9364 low and thus we look likely to move up. However, the key here is that a move back below 9532 without creating a new high, would be a big bearish signal and that is the trigger for me to expect a bearish continuation towards 9364 support.

DAX chart

Dow regains ground with decisive SMA above

The Dow appears to be moving back into a strong position for the near future, with a new higher low created and price pushing to break to a new short-term high.

Price action looks a lot like an inverse bullish head and shoulders formation, yet ultimately the fact is that we need to see a move back above 16,470 to gain confidence that this bullish reversal will last.

Should that occur, a move back to 16,700 would seem very likely. 

Dow Jones chart

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