Levels to watch: FTSE, DAX and S&P 500

Yesterday’s strong rally in the US has put the fight back into European markets, helping to steady the ship after days of losses.

Trader watching data charts
Source: Bloomberg

FTSE 100
If the index has bounced from the 5900 area, then the next area to watch becomes the 200-day simple moving average (SMA) at 6150. Beyond this, we look on to the 6300 area where gains faltered in the first week of the month.

If the price closes above here then it will head towards the April high above 6400. A close below 5900 in coming days will head towards 5600, presumably accompanied by fresh polls pointing to further strength for the Leave campaign.

The recovery in this index’s risk appetite coincided with a bounce off the 9440 area, so if we see additional gains then a return to 10,000 cannot be ruled out, with 10,500 beyond this.

At this point the downward trendline off the 2015 highs would then intervene, which would mark a crunch point – a failure to close above 10,500 leaves the DAX in its bear market, while a move above could mark the beginning of a more sustained rally. 

S&P 500
Yesterday’s sharp reversal may well mark a turning point, but the bulls need a strong close today as well, ideally above 2080 at least, to confirm a return to ground above 2100 is on its way.

A loss of momentum now risks a push back towards 2060, and then down to 2037 in the short-term for the S&P 500.

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