Technical analysis: key levels for FTSE, DAX and Dow

The renewed risk-on attitude in the aftermath of the recent falls seems fairly unstoppable.

A man walking by a chart
Source: Bloomberg

Clearly the news that UK inflation came in at 1.6% year-on-year against a median expectation of 1.8%, has emboldened investors further and made the prospect of an imminent rate hike a little more elusive.

FTSE pushes through 50-DMA

The FTSE has pushed through yesterday’s target of 6760 leaving the 50-day moving average behind, and now looks to puncture the 23.6% retracement of the February/May high lows and previous support at 6780-85.

The daily relative strength index is still looking punchy and is not yet overbought. The bullish channel in place since the 8 August lows is very much intact.

The hourly chart is registering as short-term overbought, so a small consolidation around 6780 cannot be overruled. A move through 6800 targets 6830.

Support lies at 6760 with 6743 below that.

DAX eyeing 9340 level

The DAX has also shrugged off any issues that may face its constituents in respect of Russian sanctions, and is now making a bid to push through the 9340 level and the 38.2% retracement of the move from the all-time highs to the recent lows. A move through this level may find resistance at 9380-90.The daily RSI also looks strong and is rising; now that we have broken the shackles of the 100-period MA at 9270 on the four-hour chart, this should provide some intraday support.

Price action is now running towards the upper band resistance of the rising channel from the lows around 8900 – this coincides with the 9380-90 level.

The hourly RSI is also looking a tad overbought.

Below the 9270 support lies 9180.

16,810 supporting Dow 

The Dow Jones has hit yesterday’s 50-DMA target and has actually risen through in futures trading. US CPI, expected later this afternoon, may help the index to present a challenge to the 16,900-10 region.

The daily RSI is indicating strong momentum but in the short term; the Dow is running out of steam at the 16,885 level for now with the RSI beginning to come back into neutral territory.

Support comes from 16,810 then 16,746.

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