Levels to watch: FTSE, DAX and Dow

Indices begin to show some signs of a resurgence, as they follow overnight gains in Asia. However, there is a good chance that this could provide selling opportunities for a continuation of the recent downtrend.

Source: Bloomberg

FTSE rally unlikely to last

The FTSE 100 is finally seeing some respite from the incessant selling of late, with the index rallying in response to Asian gains. However, this looks more like a retracement than a bottom and thus we would need to see an hourly close back above 5991 to negate the downtrend in the short-term.

Of particular interest is the 76.4% retracement as a point of resistance. Thus be on the lookout for a potential reversal back onto the downtrend, with key support levels at 5906 and 5844. However, should we see an hourly close above 5991, we could see the index gain further ground, with 6006 and 6042 the next resistance levels. 

DAX returns to Fibonacci resistance

Yesterday saw the DAX sell off from the 76.4% Fibonacci level and this possibility comes back into play today, with price back up above this level. We are seeing a clear push towards the crucial 9633 level, which would need to be broken to negate this short-term bearish view.

Clearly the fact that yesterday’s sell-off failed to break to a new low below 9509 is a worry, yet much like the FTSE, a bearish view remains in place unless we see an hourly close above 9633. Key support is found at 9509 and 9442, with resistance at 9633 and 9760.

 Will resurgence persist for the Dow?

The Dow Jones is also seeing some morning strength today, with the index pushing past the 76.4% retracement. While we have seen the creation of short-term higher highs and higher lows, these seem like smaller scale adjustments and as such an hourly close above 17,736 would be required to negate this bearish short-term view.

Thus a move back down to 17,594 seems more likely than a break higher.

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.