Levels to watch: FTSE, DAX and CAC

Indices rally out of consolidation, as we look set for a period of upside as a result of Friday’s poor US employment data.

Data on screens
Source: Bloomberg

FTSE retraces following breakout

The FTSE 100 is turning lower this morning, following on from the strong bullish breakout seen following Friday’s payrolls number. The fact that price broke the swing highs of 6852 and 6885 provides us with a clear positive outlook and as such this current move lower represents a likely break before another leg higher.

Watch out for key support levels of 6885, 6875 and 6852 as potential areas for another push higher. Shorter term charts can be useful for finding reversal patterns to indicate as much.

We would need to see an hourly close below 6809 to bring this bullish outlook into question.

DAX expected to push higher following retracement

The DAX is also in the process of retracing some of the strength seen both on Friday and overnight. Following the break through resistance of 10,689, there is a good chance we could see the index find support on previous resistance around 10,688 or 10,659.

In the nearer term, an ascending trendline also has the potential to push the index on towards the 10,807 resistance level. A break and hourly close back below 10,659 would bring this recent strength into question.

CAC at crucial resistance level

The CAC 40 saw a bullish breakout from a symmetrical triangle pattern on Friday, paving the way for a strong move higher over the coming weeks.

However, today we need to see the index break through a critical resistance level of 4565 in order to provide evidence that this bull run will continue rather than retrace. A bullish outlook remains unless we see an hourly close below 4373.

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