Technical analysis: key levels for FTSE, DAX and Dow

The latest Chinese manufacturing PMI, at a three-month low, has failed to impact the FTSE too much today.

Data on a screen
Source: Bloomberg

Markets are trading based on central bank inaction right now and, until either the Federal Reserve or the Bank of England decide to make a move in respect of monetary tightening, we may see additional gains in the coming days.

FTSE eyeing 6780

The FTSE has shrugged off the weak Chinese PMI, despite a selloff in the metal stock this morning, and is again attempting to puncture the 6780 level.

This has provided a good deal of resistance this week so a move through would put the UK benchmark on a trajectory towards 6830. The 6745 level was tested yesterday but succeeded in a daily close above. The daily relative strength index is rising nicely and is not overbought.

The 100-hour moving average has kept a floor on any correction – one would like to see the 6785 level convincingly challenged today, preferably with a daily close above it if we are to avoid any short-term double top. The one-hour RSI is also indicating a small amount of negative divergence.

DAX could retest 200-DMA

The DAX is looking strong this morning and is managing to break above the 23.6% fibonacci level at 9340. The RSI is also playing ball, rising through the 50 level.

Next resistance lies at 9380-9400, and a break through 9480 puts us on a move for a retest of the 200-DMA at 9520. Support lies at 9250 then 9173.

16,900 level supporting Dow

The Dow Jones is back at 17,000 leaving the 16,900 level as the key support on the daily chart. We are now looking at four straight days of gains for the Dow with the daily RSI heading for the overbought zone. We are also reaching the upper band of the one-hour bullish channel in situ since the lows of August 8, so a pull back towards 16,950-60 cannot be ruled out in the short term. The 50-hour MA comes in below this at 16,930.

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