Levels to watch: FTSE, DAX and Dow

Rumours of a big Japanese stimulus package sends indices higher, with bullish implications. Given the major event risk ahead, will they manage to build on the early gains?

Data on screens
Source: Bloomberg

FTSE attempts to break higher

The FTSE 100 is attempting to finally break out of a period of consolidation, with the 6753 level marking both the highest point reached since mid-2015 and the 2007 pre-crash high. Given the fact that we have been largely ranging over the past week, it makes sense to await a breakout rather than expect it.

Thus an hourly close above 6753 would provide a bullish outlook for the day, with the next resistance level of note at 6808. Alternately, an inability to take out this resistance level could see us sell-off towards the 6720 mark ahead of this evening's Federal Open Market Committee meeting.

DAX breaking trendline resistance

The DAX has seen substantial gains overnight, with price engaging with a descending trendline dating back to November 2015. Given the rally out of a rising wedge pattern, there is clearly substantial bullish sentiment behind this market and as such further gains seem likely.

However, given the fact that price is currently at trendline resistance and seems highly extended to the upside, it makes sense to await the reaction to this level. Thus longs seem sensible upon a retracement following a bullish trendline break, or else look for bearish intraday reversal signals for shorts.

Dow breaks out of bearish pattern

The Dow Jones has broken back above the crucial 18,522 level, thus negating the creation of lower highs and lower lows on an intraday basis. This points towards a likely leg higher from here which corresponds with the long-term bullish trend.

Given that fact, a bullish view is now in play where any pullback would be seen as a buying opportunity as long as it does not break back below 18,384. The next key resistance levels to watch are 18,600 and 18,637.

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.