Key Index levels: technical for FTSE, DAX, Dow

European markets have moved into positive territory this morning, as talk of Chinese stimulus once again lifts investor sentiment.

FTSE through 200-DMA

The gap up from Friday’s close was nicely filled yesterday, albeit adding to the choppiness in the FTSE. We are now back through the 200-day moving average at 6600, but remain capped by the 50- and 100-DMA’s around the 6660 level. This would imply that unless we get a clear break through the top of the current range, a degree of consolidation is likely.

Trading in a bullish channel for the past week with rising support from the 20 March lows at 6490, the FTSE is above the key one-hour moving average. The relative strength index is showing a degree of short-term bearish divergence, however. This could indicate a small pullback towards the 6604 region.

On the four-hour intraday, the 6642 level lies in the way between current price action and the 200-period MA at 6682. The emergence of the shooting star with its top at 6660 is important to note. Any moves through here could indicate that momentum to the upside is building.

DAX could test resistance

Trendline resistance from the 23 January highs of 9757 is creating a barrier to additional upside for the DAX. Attempts yesterday to push through the 9600 level with conviction faltered as a result. The daily RSI is not yet overbought so we may see another test of this trendline imminently.

The 50-period MA has been providing a decent buy-on-the-dips metric over the past week, and today we are seeing bids on each test of the MA. Again we have filled the gap up from Friday’s close, which tends to indicate that 9570 is lending decent support with 9540 coming in beneath that. A break above 9542 could set the index on a move towards the 9696 area. Any declines back through 9540 bring 9507 back into view.

Dow's uptrend remains strong

Despite numerous forays above it on the intraday trade, we have yet to see a daily close above the 16,470 level this year for the Dow Jones.

The uptrend from the 5 February lows remains intact and strong, and the daily RSI is not overbought. The convergence of the hourly moving averages last Friday pre-empted the spike up, but the period MA is now registering a mild degree of bearish divergence. The formation of a rising wedge on the short-term chart indicates that we could see a small retracement towards 16,440. If it is breached, then the 16,410 level should rescue the downside. A push through 16,480 targets 16,540.

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