Levels to watch: FTSE, DAX and Dow

Indices consolidate following yesterday’s strong rally. Yet we await the next signal to provide expectations of either a deeper pullback or continuation of the bullish bounce.

A chart
Source: Bloomberg

FTSE hits resistance

The FTSE has begun selling off from the 6249 resistance level (10 November low) following on from a strong bounce higher yesterday. Given the strong uptrend in play so far this week, we would need to see the price close back below 6212 for greater confidence that we will see a more protracted pullback. Alternately, a close above 6249 would be the bullish indication that the price is set to continue the bullish sentiment that drove prices higher yesterday. A close below 6212 would look towards 6174 as the next main support level, whereas a close above 6249 would subsequently look towards 6300 and 6330 levels.

DAX hits trendline

Yesterday’s rally has hit the buffers this morning, with the price selling off from trendline resistance. As the index trades within a clear pattern of lower highs, it seems likely that the sellers will return before the price reaches 10,960, yet whether this is the source of that reversal remains to be seen.

A close below 10,796 would bring a higher likeliness of a more protracted move lower, with support at 10,766 and 10,679 the next major support levels. Otherwise a close above 10,856 would be the indication that we are set to continue this rally, with resistance at 10,892, 10,926 and crucially 10,960.

Dow awaits next move

A similar story across the three markets here, with the Dow Jones pulling back moderately following a strong rally yesterday. The question is whether we will see the price close below 17,448, which would point towards a deeper retracement towards the 17,338 area. Otherwise, a close back above 17,500 would indicate another leg higher for the index, with 17,549 and 17,608 the next major resistance levels. 

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.