Levels to watch: FTSE, DAX and Dow

Indices show signs of weakness as questions are asked of the recent rally. However, with the Dow and DAX back near a crucial support level, we are looking for a reaction from current levels.

Data on screen
Source: Bloomberg

FTSE continues to range

The FTSE 100 continues to consolidate, with the 6663-6753 range continuing to dominate price action. Essentially we continue to await a breakout from this range, with an hourly close above 6753 providing a bullish bias for a move towards the next resistance levels of 6808 and 6875.

Alternately, an hourly close below 6663 would look towards the 6606 level. 

DAX retraces towards key support

The DAX has eased back towards the crucial 10,121 support level which has dictated price action time and time again throughout 2016. Given the importance of the 10,121 level, it is highly likely that we will see another break higher rather than move back below yesterday’s low.

One warning sign is the creation of a rising wedge pattern which is innately bearish. However, unless we see an hourly close below 10,121, a bullish view remains for a push towards 10,265 and higher. 

Dow showing signs of weakness

The Dow Jones has been gradually forming a potential head and shoulders pattern, with yesterday’s failure to break through 18,637 leading to a subsequent break lower. The key support levels that need to be broken would be 18,469 and 18,424.

The ability to break and post a closed hourly candle below these levels would go a long way to convincing the markets that we are seeing a reversal from the bullish trend. With that in mind, watch for how the markets respond to 18,469 today, which will likely guide price action for the day.

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