Levels to watch: FTSE, DAX and Dow

A hesitant start to the week for indices following a strong recovery towards the back end of last week.

Data reflected in a persons glasses
Source: Bloomberg

FTSE consolidates following recovery

Last week saw early losses recouped towards the latter end of the week, with the index finishing just moderately lower that the open. However, this week has started in a much more serene manner, with the price consolidating between 6357 and 6400. I will await a breakout from this sideways price action for direction, where a break higher would look towards 6454 as the key resistance to watch for while a break below 6357 would point towards 6344 and 6317.

For the medium-term outlook, we need to either see a break above 6454 or a move back below 6252 to bring the chance of another big selloff.

DAX starts to retrace from key resistance

Once more, it is the DAX leading the way, with the index having reached the 10,188 resistance point, causing the FTSE to selloff too. The pullback towards 10,068 has not necessarily proven to be a reversal as such, and for now appears to be making a symmetrical triangle formation. Given the entry, I would say an upside breakout is likely, but I would need to see a close back above 10,188 to really gain any confidence of a decent sized rally to come. A close above 10,188 would point towards 10,338. Alternately, 10,057 is the key level to watch on the downside, as this would bring into play the possibility of a selloff back down towards 10,018.

Dow continues to grind higher

The Dow Jones has been similarly consolidating today, following the slow move higher last week. We are yet to see any true reversal signal and thus things continue to look bullish. I would need at least a move back below 17,107 to gain any confidence that a selloff is impending and until that happens, I am watching for the 17,280 initial resistance level.

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