Levels to watch: FTSE, DAX and Dow

Central bank news gave a new lease of life to the bulls yesterday, and we are seeing small gains across markets in Europe and the UK this morning.

The Federal Reserve
Source: Bloomberg

Any intervention from the People’s Bank of China is good for a rally in markets, and while yesterday’s liquidity provision won’t turn Chinese growth around all by itself it will help to stem the growing tide of negativity surrounding the economic outlook for China. This will help equity markets to be more relaxed as well.

Meanwhile John Hilsenrath, the Wall Street Journal’s direct line to the Federal Reserve, provided us with another insight last night as he suggested that the Federal Open Market Committee statement tonight will not be as hawkish as some expect. This saw the Dow Jones rally, and the index finished at a fresh closing high, having touched a new intraday high as well.

FTSE battling to hold 6800

Once again the FTSE is fighting to hold on to the 6800 level, having opened above it this morning. With the Fed on the agenda for today, caution may result in the index failing to hold above this level.

A close below 6800 would see support still possible around 6780, followed by the 50-DMA at 6757. If the index finishes above 6800 today then a move to 6830 and then to 6880 is possible.

DAX finds support around 9590

The German index has found support around 9590, and is now trying to break through the 100-day moving average at 9667.

A close above 9700 would target the September high around 9800, which would then give it the impetus to move back in the direction of 10,000.

A weaker finish today would still need to close below 9590 to suggest that the overnight gains have been definitively eradicated, and the 200-DMA at 9555 is still significant support, followed by the rising trendline around 9510.

Dow eyes close above 17,131

A Fresh intraday high for the index confirms that there are still buyers to be found, even if pre-FOMC nerves are likely to hold the market back today.

To sustain momentum the Dow Jones must close above yesterday’s finish at 17,131, and a turnaround in the daily relative strength index suggests that this is possible in the coming days.

On the downside 17,060 is potential support, and below that the 50-DMA at 16,919 could also see the dip buyers step in.

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