Levels to watch: FTSE, DAX and Dow

Interest rate fears are easing slightly this morning, with indices having staged something of a recovery overnight. 

A trader looking at data
Source: Bloomberg

A weaker-than-expected reading on Chinese CPI made for a mixed session overnight in Asia, while the continued steepening of the US yield curve means the US dollar is still a very popular trade. A return to normality in Scottish referendum polls (i.e. the ‘No’ vote retakes the lead) should also help to steady nerves with the decision just a week away.

FTSE holding above 6830

London’s main index brushed 6800 yesterday, but today it looks set to enjoy modest gains. Crucially, the FTSE is holding above 6830, so while this remains the case the index can still target the highs above 6880.

Downside should be capped by the 100-day moving average around 6785 if today’s early gains turn to losses, while a close below 6785 would then target the 50-DMA around 6757.

The high point of the session yesterday on the hourly chart was 6860, so the index needs to move through this level in order to attempt a run towards the highs of last week.

DAX eyes 9800

Yesterday’s brief dip through the 100-DMA around 9662 has been turned around and the index is now looking to challenge 9800 once again.

A close above this level would give the index the impetus to target the year’s highs above 10,000. A close below the 100-DMA would then open the way to a drop to the 9600 area and then the 200-DMA around 9545.

The intraday relative strength index has yet to push into overbought levels, so the upside scenario still prevails. A dip towards the 200-hour MA yesterday was swiftly bought, so the 9800 remains the upside target.

Dow remains rangebound

A dip through 17,000 yesterday brought out the buyers, leaving the Dow Jones looking in better form. The 20-DMA also acted as support, with a close above this level still giving the index a chance to challenge the all-time highs around 17,154.

As noted by Brenda yesterday, the range for this index remains bounded by 16,910 at the bottom and then to the 17,160 level, with a break above here sending the index onwards to 17,300.

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