Key index levels: technicals for FTSE, DAX and Dow

Moves of real conviction in equity indices are fairly unlikely in the run up to the non-farm payroll release. 

Expectations are on the high side and, given that the Federal Reserve is continuing to taper its quantitative easing stimulus, the markets will want to see that weak GDP growth in the first quarter was weather related and nothing to be concerned about – hence the jobs number will need to at least meet, preferably beat the median consensus of 215,000.

It’s always a tough call doing technical analysis on indices as we approach such a significant data point release – the overall trend is up for the indices below, but as all are within touching distance of all-time highs and trading at a significant distance from their respective 200-day moving averages, and the usual irritation of the ‘sell in May, go away’ brigade, we may be ripe for a correction.

FTSE remains overbought

There have been four consecutive days of gains this week on the FTSE 100 so, as we approach the intraday high of 6817 from yesterday in early trade, the daily relative strength index remains rather overbought.

The 6820 level has been a sticking point in the past, back in early March and indeed late November, so breaking through and executing a daily close through this metric would be good news and would set us on course for a challenge of this year’s highs.

Again the 50-hour MA is providing a decent degree of support at around the 6800 level – watch for any deviation below to find support at 6770.

DAX yet to break 9647

The pivotal level on the DAX is 9647; a break above it is required if a test of 9700/20 is to be expected. The trendline resistance mentioned frequently in these articles is still the issue and we are continuing to make lower highs on the failure to break to the top side.

Support comes in at 9550 then 9520. Any moves through the lower support take us back towards 9480.

Dow Jones awaits NFP

The Dow Jones is threatening the 16,600 level but has yet to establish a daily close above it. With non-farm payrolls due out before the bell, we can expect the usual degree of volatility upon the release. Support comes from 16,530 then 16,505. Wild swings could well see 16,451 tested too.

A break out of the top end of the range could result in a measured move to the 17,000 level in the coming weeks. Likewise, a move back through the 16,360 could see a return to 16,130.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.