Levels to watch: FTSE, DAX and Dow

It has been a weak start to the day following on from yesterday’s blockbuster rise for indices, yet did that rally set up a likely next move higher for indices?

Trader looking at data screens
Source: Bloomberg

FTSE drifts lower overnight
Yesterday’s blockbuster move higher for the FTSE brought about a new three-week high for the index, defying initial signals that we could be seeing a top for the index. The pullback we are currently seeing has brought price back to the 50 and 100-hour simple moving averages (SMA) along with trendline support.

Given this cluster of support levels, alongside the fact that we have failed to break any support levels within this move lower, there is a chance we could see another move higher from this area. As such, it seems worth watching out for any bullish reversal signs.

A move back below 5911 would bring the bearish view back into play. Resistance levels of note are 6024, 6033 and 6065, with support at 5973, 5946 and 5911. 

Will DAX pullback last?
The DAX is also seeing some weakness this morning, with the index drifting lower from the double bottom projection of 5963. Much like the FTSE, we saw last week’s highs taken out to negate the initial signs that we could be reversing lower after a big move higher last week.

As such, this current move lower looks like a retracement, where the bearish outlook would only return in the case of price breaking back below 9302. Thus it seems sensible to watch out for bullish reversal signals within this current sell-off.

Resistance levels of note are 9563, 9588 and 9623, with support at 9429, 9410 and 9302.

Dow retraces yesterday’s move higher
The Dow Jones is also following the weakness seen in Asian and European markets, as the index drifts lower this morning. Set within the trend over the past week, this pullback looks likely to be temporary, with a bearish view coming into play should the Dow move back below 16,275.

As such, it seems sensible to watch out for bullish reversal signs within this sell-off. Resistance levels of note are 16,511, 16,549 and 16,663, with support at 16,388 and 16,275.

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