Levels to watch: FTSE, DAX and Dow

Indices are little changed this morning, ahead of a day where key central bankers are set to make public appearances.

Data on glasses
Source: Bloomberg

The terms of Greece’s deal, although delayed until this morning, now look set to gain the approval of eurozone finance ministers. However, this is unlikely to excite markets since it merely confirms the status quo. More important will be the speech by Mario Draghi later today (at 2pm London time) and then testimony by Federal Open Market Committee chair Janet Yellen (from 3pm London time).

Mr Draghi is expected to stick to the European Central Bank line on a slow eurozone recovery, while probably revealing little about the upcoming start of quantitative easing. Ms Yellen may well come out with a more hawkish tone compared to the recent Federal Reserve minutes, which could result in downward pressure on indices and other risk assets as the US dollar gains.

FTSE bears eye 6800

The index continues to fight hard to remain above 6900, but has made precious little progress from this point onwards. The 6960 level is now resistance for any further gains, while 6850 on the downside may well provide support.

The daily relative strength index has yet to break out from its current drift, remaining above 50 (which normally signifies buying strength) but not able to move higher. A break below 6800 would hand the initiative back to the bears, at least in the short-term.

DAX RSI sees steady drop

Germany has failed to move beyond the highs of the past three sessions, with the ceiling I highlighted yesterday still in place. With Mr Draghi on the schedule for the day most traders will likely wait to see what he has to say, but given the steady drift downward in the daily RSI I suspect the market is not in a mood to get overexcited. Instead DAX buyers will look to buy on weakness towards the 20-DMA.

While the 50-DMA may provide some support in case of a selloff, the real area of support will be the rising trend off the October lows, currently around 10,200, should a swift reversal take place.

Dow could find support at 50-DMA

The Dow Jones continues to hover around the support zone of 18,106, but with little inclination to go higher. It still has room to head towards 18,250, given that the RSI for this index is still moving higher, albeit slowly.

A dip would find support towards the 50-DMA at 17,750, and then this index’s own rising trendline support (running from the October lows and touching the dip seen at the end of January) would come into play.

Yesterday any drop towards 18,060 was treated as a buying opportunity, so we will see if this is repeated today. If Janet Yellen opts for a more hawkish tone then some of Friday’s gains could look vulnerable. 

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