Levels to watch: FTSE, DAX and Dow

Low volatility is in play at the start of the week, yet with both the FTSE and DAX in clear short-term directional trends, the continuation of these patterns seem likely.

Data reflected in a persons glasses
Source: Bloomberg

FTSE gradually selling off

The FTSE is clearly trending lower over the past three trading days. With trendline resistance in play, the continued respect of this would point to further losses. The 6356 level has provided key support over recent weeks, and thus this is certainly a level worth watching out for. A close below 6356 would point towards a move back towards Friday’s low of 6331 and possibly on towards 6312. However, watch out for the 50-hour SMA and trendline resistance around 6376, which if broken could begin a move back towards the 6420 and 6460 area.

DAX sells from channel top

The DAX continues to trade within an ascending channel formation, with the index clearly selling off from the top end of this pattern. With the stochastic oscillator and MACD histogram both turning lower, there is a clear case that momentum is also pointing towards a move lower. As such, further downside seems likely, with key support expected at 10,892 and 10,856, whereas the price would need to break through the top of this channel (currently 11,070) to begin looking bullish.

Dow rangebound

The Dow Jones continues to trade largely sideways, with price ranging between 17,782 and 17,914. The price is currently selling off from 17,914, and thus I expect to see a move back down towards the 50-period SMA (four hour) and 17,800 support zone. The moving average has held up the price on a number of occasions, and there is a good chance that we will see this cap the move lower that seems likely today. A closed candle back above 17,914 would be needed to gain a more bullish picture here, which given the trend in play, would be the likely resolution of this period of consolidation.

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