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

US markets return to the fray after their holiday, which should provide more direction for markets after a mildly weak session yesterday. 

US trader
Source: Bloomberg

FTSE 100 eyes 6940

After pulling back yesterday, due to a combination of overbought status and a rising pound, the index appears to be holding up well. The first target will be the 6940 area where gains topped out on Friday, and then on to 6956, the high from 15 August.

It would take a move back below 6850 to put a real dent in the trend, although a daily close below 6820 would be the firm indication of a bearish trend.

Intraday, the index so far shows little desire to push below 6870, with dip buyers so far entering around this level.

DAX could find support at 200-hour SMA

There has been a steady push higher overnight, adding to the generally bullish outlook for the DAX.  A further move higher would head towards 10,754, the peak from yesterday morning, while the next area to watch would be the mid-August high around 10,800.

The 10,668 mark could prove to be support, with a further drop potentially finding support at the 200-hour simple moving average (10,599). Below this, the key 10,500 level, which acted as support in the second-half of August, comes into play.

S&P 500 could see further upside

US traders return to their desks today and we will see whether they can maintain the positive momentum from Friday. With the dollar still struggling, further upside could be on the way, with a move above 2185 opening the way to the 2194 peaks from 15 and 23 August for the index.

A rising 50-day SMA (2160) could provide support, while those expecting declines will want to see sustained price action below 2150, which acted as support for most of July and August.

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