Levels to watch: FTSE, DAX and Dow

The FTSE and DAX seek to challenge major resistance levels, with the FTSE in particular seeking to finally break its three-month downtrend. Meanwhile, the Dow finds itself in a falling wedge pattern.

Women walking past data screen
Source: Bloomberg

FTSE trading within crucial zone

Yesterday’s FTSE 100 pullback has reversed higher from the 6033 support level, bringing us to a very interesting point in time. To the upside we have the absolutely crucial 6128 resistance level, where a break higher would negate the clear downtrend in play over the past three months.

To the downside, we have the 6033 support level, which is beginning to look like the neckline of a potential topping pattern. The direction of this index is going to be set by a break out of this range.

The trendline break seen this morning points towards a possible challenge to 6128, yet until it happens, be aware that the importance of this level should not be undermined and thus another move lower is a distinct possibility. Ultimately, the key will be whether the index breaks upward through 6128 or below through 6033 to gauge ongoing direction.

Awaiting DAX directional break
The DAX is also finding it tough to decide which direction to move, with price gradually coiling in the same manner as a symmetrical triangle. Much like the FTSE, we have a major resistance level that needs to be taken out for a move bullish view to come into play.

That is Friday’s high of 9590. A significant break through that level will provide a more confident bullish view, with 9623 and 9759 the next major resistance levels. The current rally at the open points towards another challenge of this level, but it seems prudent to await the break rather than predict it. Support levels of note are 9429, 9410 and 9352.

Dow rallies towards trendline resistance
The Dow Jones is rallying heavily within a falling wedge pattern. With the 16,511 support level representing the double bottom neckline and trendline support just below there, we could see a break out of this pattern. However, as ever it seems sensible to await a break and hourly close above the first swing high of 16,727.

Until that happens, this pattern is expected to continue, with a likely rally into 16,663 levels. At which point it would be worth watching out for possible bearish reversal signs or a breakout. Should we see a bullish breakout above 16,727, Friday's high of 16,844 would be the next resistance level of note. However, should this pattern persist, support levels of 16,549, 16,511 and 16,420 would be worth watching.

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