Technical analysis: key levels for FTSE, DAX and Dow

Markets have rallied again this morning, and with US indices looking particularly healthy it seems the latest bout of geopolitical worries have abated.

Man looking at graph on computer
Source: Bloomberg

FTSE looking towards the 6880 level

With the FTSE 100 through its 50-daily moving average and the relative strength index pointing higher, the overall picture seems to be looking towards another run at the 6880 level.

A slow start this morning has given way to a more energetic mid-morning session, now that the Bank of England minutes are out of the way. The rebound from the 200-DMA is now complete, but there is only a short distance until the index runs back to the highs of May and June.

A close above 6900 would be the most positive sign, while on the downside, a failure to hold above the 50-DMA today or a move back below 6800 would suggest some more indecisive movement ahead.

DAX aims for 50-DMA

The DAX is performing well too, but we need to see a close through 9800 to be assured of the strength of the move. However, the RSI is ticking higher which is an encouraging sign, along with the signs of a move higher in the stochastic indicator as well, taking this signal out of oversold territory.

A close above the 50-DMA would be the best sign, and would leave the index open for a run to 10,000 once again. Only a drop below the 100-DMA and 9600 would send a signal that the move higher has been cancelled out.

Dow could find support at 16,800 level

There is no one-way-bet in markets, but the Dow Jones is seemingly trying to create one. The level 17,150 is only a short distance away, and then we will be in new all-time high territory yet again.

With the 20-DMA at 16,993, it would take a drop below this line to signal short-term weakness. Even then, the 50-DMA and 16,800 should provide ample support.

The real risk to the bull case is a move into overbought levels for the RSI, which would signal another short-term dip.

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