Levels to watch: FTSE, DAX and Dow

While the UK’s leading index still looks strong, gains in the US appear to be under threat.

Data on screen
Source: Bloomberg

FTSE eyes 6800

Three days of gains have turned the index resolutely bullish, with buyers hoping for a fourth day too. If we can sustain gains above 6700 then the target now becomes the 200-day SMA at 6765, and then on to the 6800 high from the middle of the month.

Daily stochastics appear to have bottomed out, leading to further buying pressure and upward momentum. We would need to see the index move back below 6600 to reverse the outlook.

DAX could target 11,800

Eurozone indices have yet to turn fully bullish, with daily stochastics still stuck in bearish mode. Two days of trying to break through the 50-day SMA (11,312) have produced little effect for the DAX, but if we continue to see gains above this level then the natural upside target is the 11,800 peak from mid-July.

Having moved back above the descending trendline above the all-time highs, it now looks like the buyers are back in charge, especially with a falling euro adding to the positive catalysts.

Dow could test 200-day SMA

Progress has stalled shy of the 17,800 level, but the strong finish to yesterday’s session signals that the bulls are still in charge, even if the rising dollar muddies the water slightly.

The index now needs to move on to test the 200-day SMA at 17,833, and ideally close above it, which would then allow it to test the descending trendline around 18,000.

A failure to make further gains today could signal that a turn lower is on the cards, although month-end trading will make it more problematic to guess what the next move will be. 

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