Levels to watch: FTSE, DAX and Dow

Indices continue to grind higher, yet this countertrend bounce seems likely to fail at some point.

German traders at the stock exchange
Source: Bloomberg

FTSE continues to rally higher
The FTSE continues to move higher this morning, in a continuation of the rally which has seen the index gain over 6% since last Thursday’s low. This period of upside seems likely to be a temporary phenomenon and thus the medium-term bearish outlook remains.

However, we have not seen any signs to say this short-term uptrend is finished for now. As such, further upside is expected, with 5945 and 6000 the next key resistance levels of note. Our bearish view would begin to take shape with an hourly close back below 5809, which would then look towards 5768, 5740 and 5713 support levels. 

Will early DAX weakness spark reversal?
The DAX has been moving lower this morning, following on from an overnight move higher which pushed price up towards the crucial 9300 resistance level. Ultimately we remain within a short-term uptrend over the past three trading days and as such, there is a good likeliness the bulls will return in due course.

It is worth noting that, much like the FTSE, we expect the bearish trend to return later in the week and this current bullish view is a short-term countertrend view. This bearish view could return with an hourly close below 9194, which would bring 9130, 8903 and 8700 into play.

Further upside expected for Dow
The Dow Jones is in a similar situation to its European counterparts, with a countertrend rally in play since Friday. While we are also seeing this fade somewhat, it looks like another leg higher would be likely unless we see an hourly close back below 16,132.

Resistance levels of note are 16,235, 16,278 and 16,483. Support levels to watch are 16,132, 15,903 and 15,848.

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