FTSE 100, DAX and Dow gains could be short-lived

​​FTSE 100, DAX and Dow regain ground, yet it could be a precursor to further downside.

FTSE 100 rises back into Fibonacci resistance

The FTSE 100 has managed to push higher once again this morning, with the index rising through trendline resistance after overnight losses. The triangle formation seen over the course of April could break in a bullish manner if the index rises through 5849.

However, with the 76.4% Fibonacci level up ahead, it is worthwhile watching this area of resistance as a potential turning point for the FTSE. With the stochastic moving back into overbought territory, there is a chance we could see price start to consolidate or roll over around these levels. This bearish outlook is negated with a break through 5849.

DAX rises within consolidation/topping phase

The DAX failed to break below the 10,152 support level on Tuesday, with the index maintaining the price action within its consolidation or topping zone. The breakout from this range should ultimately guide us in the direction of the next move.

However, with US markets providing a more bearish outlook, a follow up on those moves would likely drag European markets with it. In that scenario, the current rally looks like it could be a short-term retracement before we turn lower once more. The price is currently respecting the 50% retracement level, yet we could move further into a 61.8% or 76.4% pullback. In any case, a bearish outlook is in play unless we see a rally through 10,773.

Dow Jones rally could be doomed for failure

The Dow Jones is regaining ground following a strong downward move in the early part of the week. That breakdown took us below the 23,089 support level to break the previous uptrend.

With that in mind, there is a good chance we are currently retracing before the index rolls over once again. Thus, keep an eye out for Fibonacci resistance to potentially come into play from here. As such, while we could see further upside for the short term, that move is likely to roll over rather than break through the 24,447 peak. Such an upside breakout would obviously negate this current bearish outlook.

IGA, may distribute information/research produced by its respective foreign affiliates 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.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. 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, and 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.

Please see important Research Disclaimer.

Take a position on indices

Deal on the world’s major stock indices today.

  • Trade the lowest Wall Street spreads on the market
  • 1-point spread on the FTSE 100 and Germany 40
  • The only provider to offer 24-hour pricing

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.