Levels to watch: FTSE 100, DAX and Dow

Yesterday’s losses provided the chance for dip buyers on Wall Street, while in Europe, the DAX only saw short-lived selling.

Price chart
Source: Bloomberg

FTSE 100 dips below 7300

FTSE 100 is dropping back from the highs of the past week, but for now remains in an uptrend from the lows of two weeks ago. A rising trendline from those lows would come into play just below 7260, which would create a higher low and a potential area to add to positions or initiate new longs.

A close below 7250 would then raise the prospect of a test of last Friday’s low at 7233, with 7194 below that. Last week’s high of 7323 is the first target to watch on the upside, followed by 7360, 7400 and 7450.

DAX holds its ground

While US markets have taken relatively heavy losses, the DAX has barely moved. The 12,550 area has acted as support since last Thursday, and then 12,500 below this comes into play too. A bounce from current levels needs to move through 12,660, since this was resistance last week and also back in early July (shaded area on chart).

As noted yesterday, the strength of the early September breakout means that we could see a drop back towards 12,300 and still be in an uptrend, DAX has yet to create a meaningful higher low.

Dow finally sees a dip

The news surrounding North Korea knocked Dow Jones back sharply, but a dip down towards 22,200 brought out plenty of buying pressure.

The ongoing rally looks to have managed the pullback from overbought levels quite nicely, and so we look for a push back to 22,400 and higher. A turn lower would first target yesterday’s low at 22,216, followed by 22,179 and then 22,086. 

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