Levels to watch: FTSE, DAX and Dow

European and US indices find a bid, as overnight gains continue this morning. However, this looks highly likely to return back into a bearish trend again.

Data board
Source: Bloomberg

FTSE 100
The index has got off to a strong start this morning, as it moves towards the crucial 6130 mark. The existence of a symmetrical triangle formation highlights the indecision after Friday’s lows and as such, we await the breakout from this tightening range to provide us with direction.

A closed hourly candle above 6130 would provide a more bullish outlook, with a close below 5955 looking likely to spark another leg lower for the index. Given the current proximity to the 6130 mark, it makes more sense to be short given the weakness coming into this pattern. 

DAX
In a similar manner to the FTSE, the DAX has seen a strong overnight session, with the index rallying towards the 76.4% retracement. This seems a good place for bears to go short once more, with a break and hourly close above 9591 required to negate the recent downtrend.

As such, a move lower is expected, despite this recent rally. The stochastics also confirm this view, given it is the most overbought we have seen it since Friday’s Brexit vote. 

Dow Jones
The trio is wrapped up with the Dow Jones, which is in a very similar situation. We have a heavily overbought market, which is rallying into the 17,300 region (76.4%), set within a downtrend.

With that in mind, this current move looks like an opportunity to get short at a better price. A bearish view is held unless we see an hourly close above 17,374.

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.