Levels to watch: FTSE, DAX and Dow

Both the FTSE and DAX have bounced from key support levels, following recent weakness, while the Dow has become increasingly unpredictable given political and economic considerations.

Traders at New York Stock Exchange
Source: Bloomberg

FTSE bounces from H&S neckline

The FTSE 100 managed to maintain the price above the crucial 7253 mark yesterday. Despite some overnight losses, we are now seeing the index rally after setting a new higher low.

A break through 7322 would be particularly telling as it would provide a new intraday higher high. However, for now it looks like we are simply in a rebound mode following the respect of a key support level. The crucial question will be whether we break through 7363, as this would negate the wider trend of lower highs. Alternately, a break through 7253 would provide a bearish outlook. Until then, short-term gains seem likely. 

FTSE chart

FTSE chart

DAX heading back towards Fibonacci support

The DAX has been in a retracement phase in April so far, with the lows of the week coming in around the 50% retracement. The fact that yesterday’s low failed to break below that Fibonacci retracement (at 12,118) could be a sign that this will be the bottom of the pullback.

However, with the trendline resistance also respected, there is a chance we could see another move lower. Any such pullback would be seen as positive, as it would set us up for a better opportunity to get long.

There is a chance of further downside from here, with an hourly close below 12,118 pointing towards a move into 12,055 and possibly 12,000. However, such moves are seen in the context of a wider uptrend and, as such, the preference is to look for longs as the market descends. This bullish view is only negated with a break below 11,850.

Dow showing signs of potential weakness

The Dow Jones has been particularly choppy of late, with the market looking relatively difficult to decipher compared with its European counterparts. This is no doubt due to the sheer amount of fundamental and political shifts we have seen this week.

Nevertheless, we have a clear support level which must be broken for further losses to ensue, with 20,515 the downside level to watch. To the upside, a break through 20,756 would paint a more bullish picture. 

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