Levels to watch: FTSE, DAX and Dow

It looks to be a tough day ahead for indices, particularly in Europe, with the Greece drama still centre stage.

A man looking at data
Source: Bloomberg

We will have to wait until 5pm (London time) for the outcome of the Eurogroup meeting today relating to Greece. Borrowing costs are on the rise in Athens, and the stock market there is falling once again. Both sides have kicked the rhetoric into higher gear over the past twelve hours, as yesterday’s optimism takes a knock.

Tensions in Ukraine are not helping matters, as the peace mission headed up by France and Germany runs into difficulties. It looks to be a gloomy outlook for the rest of the month, although at least investors can look forward to the start of European Central Bank’s quantitative easing in March.

FTSE still rangebound

The FTSE 100 still finds itself becalmed in-between the 6800 and 6900 zones. This kind of consolidation period looks eerily similar to periods in September and early December 2014, when a week or more of rangebound trading preceded a sharp drop.

Caution abounds, with miners down in London following a poor showing for the sector last night in Australia. With the daily relative strength index still in retreat as well, the default position appears to be a bearish one, targeting the 6760 zone and then the 200-day moving average at 6680.

As before, the 6900 level is still the first target on the upside, but with Greece dominating the news it seems unlikely that we will revisit this area any time soon.

DAX RSI declining

Although yesterday’s session reversed the downward trajectory the picture still looks weak for the DAX. The 10,600 level is, still, the big one to watch on the downside, and with a declining daily RSI still in play it seems that we will retest this area. A deal today relating to Greece seems very unlikely, given the eurozone’s propensity to delay a solution until the last possible moment.

Gains over the past twelve hours have been stalled around the 200-hour moving average, while a downtrend line running off the February 3 high is also assisting in capping the upside. Until 10,600 is broken however, sellers should remain cautious.

Dow could return to 17,700

US indices have been unable to hold on to the highs seen last night, and in the Dow Jones’ case the zone around 17,900, which marked the high of early January, is still acting as a stumbling block.

With the hourly chart seeing declines in both the RSI and other momentum indicators, we are now watching for any move back towards 17,700, which marked the lows of the week so far.

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