Technical analysis: key levels for FTSE, DAX and Dow

If we thought trading volumes were low over the past week, today will likely be no different with the US off for Labor Day.

German stock exachange
Source: Bloomberg

Nonetheless, we have got some decent macro events this week that will likely provide the catalysts for equity and FX direction. The Bank of England is likely to hold fire this week, and we‘ve already had fairly disappointing PMI data from the eurozone and China this morning. Whether this will give Mario Draghi the impetus and courage to provide more stimulus will ensure that the press conference on Thursday will be given an in-depth post-mortem. Any signs of increased dovishness may bring the bull roaring back to European indices.

FTSE capped by 6830

The FTSE is holding in a 30-50 point range at the moment, capped by the 6830 level. Per last week’s take, the support at 6780 was tested and held fast. Only a break below here,  on a daily basis, would see us return to 6740.

Above 6830, on a daily closing basis, we could see the FTSE target 6875.

DAX still beneath 9600

The DAX remains closeted beneath the 9600 level. We have failed to hold above the 200-day moving average, and with price action below the 50% retracement of the move from the all-time highs to the lows of August 8 at 9473, the risk for a return to 9390-9400 is reasonable. The break of the bullish channel on the four-hour chart indicates that momentum is starting to wane. A break back down through 9376 would put the DAX back on a move towards 9340.

17,018 supporting Dow

The all-time high on the Dow Jones remains the important metric at 17,154. At present, the index is trading in a range with the high at its peak and 17,018 providing the support. The daily relative strength index has retreated from the overbought zone and suggests some sideways action at best today.

Below the 17,018 lies 16,980 then 16,910.

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