Levels to watch: FTSE, DAX and Dow

The Greek elections have not produced the turmoil in markets that many have feared. Instead we have a relatively calm open today after a sharp drop for futures last night. 

Data reflected on man's glasses
Source: Bloomberg

The problem with the Greek elections, which did not apply to the European Central Bank decision, is that the consequences are so unclear. We may already be on a path to a Greek exit from the euro, or a messy compromise, or a number of other outcomes. Thus, markets have (rather sensibly) opted to focus less on Greece and more on the ECB’s regular monthly injection of €60 billion.

A strong IFO reading this morning means that the DAX is surging once again, but another drop for commodities has resulted in the FTSE 100 struggling to make any gains during the session so far.

FTSE could find support at 200-DMA

Having clawed back overnight losses the FTSE 100 finds itself back above the 6800 mark. A close above here, ideally ahead of last week’s high of 6820, still puts it on course to test the 6900 highs that were such a tiresome feature of 2014.

The rally is intact, but a fresh overbought reading on the daily chart and an inability to push beyond 6820 will signal that the rally may have run its course.

In which case, we look towards support at the 200-day moving average at 6680 and then the 50-DMA around 6580, while rising trendline support off the January lows comes in around 6580 as well.

DAX ignores overbought reading

Fresh all-time highs for the DAX this morning will be no surprise to those that have watched the remarkable rally in this index during the course of 2015. The DAX seems content to ignore its sharp overbought reading, yet another reminder that the relative strength index, while useful, does not immediately signal a turnaround as soon as overbought/oversold numbers are recorded.

DAX watchers should continue to keep an eye on the hourly chart. The 100-hour moving average has acted as a good entry point in recent weeks, while the uptrend off the 6 January bottom is still intact. Support from this line could be found around 10,400, which would still only be around a 3% drop from the current level.

Dow could target 17,700

Friday’s weak end put the cat among the pigeons, but it has yet to completely spoil the rally in this index. The drop back from 17,800 was precipitate, but so long as the uptrend line off the 16 January low holds (as it has this morning) the bulls can remain relatively confident.

In fact the post-Greek election dip may have afforded a good entry point, given the sharply oversold reading on the hourly RSI and the bullish crossover witnessed on the stochastic momentum index.

US futures are currently battling with the 100-H MA as they attempt to close the gap from last night, but a solid move through 17,600 puts the index on target for 17,700 and then the highs from Friday. 

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