Levels to watch: FTSE, DAX and Dow

Investors will be on the lookout for a ‘Santa rally’ this week, with early action suggesting buyers have returned after hefty losses for major indices. 

Data chart
Source: Bloomberg

FTSE 100 bounces again
The index has bounced off 5900 once again, repeating the trick of late September. If the price can sustain a move through 6000 then we may have seen an end to the December slump, and will push the index back towards 6300,

This, however, may be a short-term bounce before the next drop, but it will tick the ‘Santa rally’ box nicely. A move through 5900 reignites the downward trend and puts the index on course to test the August lows around 5780.

DAX to test 10,500
Monday has started with a move back through 10,400 for the DAX, recovering some of the ground lost on Friday. However, buyers need to move the price through 10,500 to be certain that a bounce is in the offing.

If this happens, we look to 10,700 and then on towards the descending trend line at 10,810. Further moves downward below Friday’s lows would put 10,135 and 10,005 in view as possible support.

Dow looking higher
US futures are steadying after their own modest drop, but the Dow Jones will need to move back through 17,420 to be sure that a bounce is in progress.

The next target becomes the 17,625 area, and then on towards 17,800. Further declines will find support around 17,148 (the 100-day simple moving average), and then 17,103 and 16,962. 

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