Technical analysis: key levels for FTSE, DAX and Dow

Markets remain a little cautious and while we are off the lows, the fact that UK average earnings actually slumped does seem to delay any tightening action from the Bank of England, which should be positive for the FTSE.

The Bank of England
Source: Bloomberg

US Retail sales, later today, will be given heightened importance – a poor number would take the shine off the recent Q2 GDP numbers.

FTSE challenging 6645 region

We are still challenging the 6645-50 level on the ex-dividend trading FTSE 100, and we may now be looking at an inverted head and shoulders pattern on the one-hour chart. A move through this resistance would complete the pattern and lead to a move towards 6760. The rising relative strength index coupled with last Friday’s bullish candle, indicates that we may now have a bottom in place for the UK benchmark.

There will likely be some consolidation/pull-backs at 6680-90 just below the 200-day moving average, then at 6730 should the index head higher through this important metric.

The 6580 level is the key support – any moves back through here could target last week’s lows around 6506.

DAX unable to move past 9200

Still unable to push towards the 9200, the DAX remains closeted beneath the 23.6% retracement of the down move from the all-time highs. A close above this 9180 level could help put the index on a more convincing drive upwards. This, with the daily RSI breaking back from oversold, would embolden a move towards 9340. The 200-hour MA was the sticking point on the intraday chart yesterday, and today we are seeing price action clamber above it.

We could be seeing an inverted head and shoulders pattern unfurling on the one-hour chart – a break through 9230 would help it materialise.

Support lies at 9088 then 9030.

Dow supported by 200-DMA

The Dow Jones is once again taking a look above the 16,600 level. A daily close through here would cement a move higher. Key support is at the 200-DMA (16,390) but one might expect to see the 16,515-20 level offer an element of support, given the coordinates of the 50- and 200-hour MAs which are currently attempting to manifest a golden cross on the same timeframe.

A break through 16,615 targets the 100-DMA at 16,672.

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.