Levels to watch: FTSE, DAX and Dow

A resurgence for indices puts a more bullish slant to the week.

Two women walking past a data board
Source: Bloomberg

FTSE resurgence leads to an early morning selloff

Yesterday not only saw the FTSE close back above 6317, but then use that level as support for another move higher. The rally failed to retake the 9 October peak, yet a bullish reversal has clearly happened on the intraday chart.

We are seeing a pullback this morning, but given the creation of new highs and higher lows, we would have to see the price move back below 6317 to start looking bearish once more. With that mind, I am expecting the price to find support at either the ascending trendline that is currently being tested, or else the 100/200-SMA and 6344 cluster.

We are clearly now creating higher highs and higher lows on the intraday charts, which thus points towards a continuation unless the price moves back below 6317. The next level of resistance to watch is at 6408 and 6454.

DAX hits October high and retraces

Unlike the FTSE, the DAX has managed to match the high set earlier this month. However, like the FTSE, we have seen this market reverse higher, with the creation of new highs and higher lows.

This morning is seeing sharp selling following 10,188 resistance, yet given yesterday’s moves, it looks more likely that we will once more turn higher, than selloff to the extent that this will turn bearish once more. Thus in essence, I am bullish unless the price moves back below 10,018. Should this downside persist, the 10,068 level seems likely to provide a good area of support.

If this market indeed moves higher once more, the first obvious resistance level to watch is at 10,188 followed by a more extended 10,344.

Dow breaks resistance to bring bullish outlook

Yesterday saw the Dow Jones break through the crucial 17,018-17,037 resistance zone at the second time of asking. This led to a significant increase in volatility and pushed prices back above 17,172, albeit for just a brief moment.

The pullback we are currently seeing looks a lot like a short-term flag formation and I expect to see the uptrend resume today. Until a new low has been set, I would have to see a move back below 16,937 to look bearish once more. However, a break back above yesterday’s peak of 17,192 would be the signal for further upside and a resumption of the strong uptrend that we saw. Key support is at 17,037, 17,010 and 16,937, while resistance is expected to be found at 17,246 (100-day SMA).

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.