Levels to watch: FTSE, DAX and Dow

Consolidation and indecision reigns for the indices, which are clearly taking a breather following recent strength. Is this the lull before the ECB storm?

US trader
Source: Bloomberg

The FTSE 100 looks like it could be continuing its recent consolidation, with yesterday’s sideways price action giving way to gradual losses overnight.

With a consolidation phase underway, the stochastic becomes more useful and as such, the current bearish cross could have implications for price action. Ultimately, the trend coming into this pattern means it makes sense to remain bullish unless we see an hourly close below 6432.

However, there is the potential for a descending channel to come into play over the short-term and as such, we would need a break and close through 6744 to resume the recent uptrend.

The DAX has broken out of an ascending channel overnight, following an inability to push through the 76.4% retracement. This morning has seen support found on yesterday’s low, but certainly there are some signs of weakness coming through.

That being said, we would need to see an hourly close below 9976 to negate this current rally, with a move lower likely should that occur. Otherwise, the uptrend remains intact, with the 10,170 hurdle needing to be overcome to continue this rally

The Dow Jones has had a particularly dull few days of price action, with consolidation dominating since Thursday’s morning rally. Given the trend into this current sideways pattern, the breakout is expected to be to the upside and as such, a bullish view remains unless we see an hourly close below 18,424.

Should that occur, it would not necessarily mean that the trend has ended, but it would signal a double top pattern and thus could lead to further short-term losses.

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