Levels to watch: FTSE, DAX and Dow

Market choppiness has made for a more difficult trading environment.

People walking past charts on a display
Source: Bloomberg

FTSE 100 back in resistance zone

The FTSE 100 saw an overall gain in last week’s candle, despite significant choppiness and unpredictability. This region has seen the price turn on a dime on a number of occasions and thus while the price remains above 7065 and below the ascending trendline from November (currently 7145), the likeliness of a sudden selloff is greatly increased.

This morning has seen such a move, with initial strength coming into resistance at 7105. Given that we are seeing higher lows and lower highs, the direction is still fairly uncertain. With the uncertainty surrounding the future of Greece and how it will impact the Eurozone, it is unsurprising to see such indecision. Thus for now, it seems prudent to expect continued ranging between 7130 and 6975. Once one of those is broken, it will give better direction going forward.

DAX heads back towards major support level

Despite last week’s moderate resurgence, the DAX failed to hold on to the strength seen in the early part of the week and is now heading back towards the crucial 11,618 level. That represents the neckline of a potential double-top formation, and as such a close below that would be a major bearish signal going forward.

Alongside support at 11,618, the 50-day simple moving average (SMA) at 11,753 and an intraday ascending trendline have the potential to provide further support. With both the MACD and stochastic providing a bearish divergence with the price, the potential for a correction lower is certainly there, yet I await a move below 11,618 to gain confidence that it is happening. Therefore until that break happens, I will be watching out for a bounce from the 11,618-11,670 zone.

In the same way that bad news within Greece can send the DAX sharply lower, any resolution has the potential to spike prices. Thus be wary of any fundamentally driven volatility.

Dow triangle expected to hold following recent strength

Last week saw the US markets play catch up with their European counterparts, with the Nasdaq hitting new highs and the Dow Jones taking back all the losses from the week before. However, the price has now returned towards the top of the symmetrical triangle that has been in play for the past two months.

Ultimately, the long-term trend certainly looks bullish and with that picture in mind, I would not be surprised to see an upside breakout from this current consolidation. However, with the uncertainty that is plaguing the markets, it makes more sense that we continue to see the symmetrical triangle respected. With that in mind, I am looking for resistance around 11,150 to hold and will be watching for the move below 18,008 for confidence that the move back towards the 17,850 region is happening.  

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