Levels to watch: FTSE, DAX and Dow

The Greek crisis returns, sending global markets crashing through crucial support levels.

A man looking at data
Source: Bloomberg

FTSE spikes higher following Greek fueled selloff

Yesterday’s selloff in global indices was bad enough, until Greek PM Alexis Tsipras handed in his resignation, bringing back fears of yet further instability and crisis in Greece. Crucially this brought us past yet another major swing low, at 6295. However, the major bounce higher this morning is bringing us into possible recovery territory.

For me to gain confidence that the index is going to see further upside, I would need to see a move back above 6310, which was the recent resistance before the latest leg lower.

The price is currently challenging this level and thus I would be looking for new support on either 6310 or 6295 should we see a clear move through the former.

Ultimately, it’s always going to be difficult to call upside in the face of such substantial losses. However, 6310 is crucial to the day’s direction and I would be more confident at a pullback to such levels rather than playing the initial breakout. Upside resistance is expected at 6310, 6352, 6384 and 6411, while support would be back at 6200 and 6123.

DAX bounces from multi-month trendline

The DAX selloff has been equally sharp, with the price returning to the March trendline which certainly felt like an unlikely event back in July when we saw the upside breakout. Given the trendline support, this gives some clarity over why the FTSE stopped to reverse in relative no man’s land.

In a similar case to the FTSE, we have a near-term resistance level at 10,288 that if taken out, I would be looking for new support to be formed for another move higher. Otherwise, another means of gaining some form of safety net to a long view would be waiting for a pullback to create a new higher low and then awaiting the break above the previous peak. Needless to say, given the sharp downtrend in play, any upside positions should be treated with caution.

Dow bounce higher still away from near-term resistance

The selloff in the Dow Jones is still some way away from creating a new intraday high, which would necessitate a move back above 16,969. Largely, given the moves we are seeing in European indices, I would not be surprised to see further upside, but strictly speaking, as long as the price remains below 16,969, I would expect further downside. 

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