FTSE 100, DAX and Dow rally after Fed intervention

FTSE 100, DAX and Dow rebound on the action from the Federal Reserve, with the indices heading back towards Fibonacci resistance levels.

FTSE 100 rebounds back through key resistance level

The FTSE 100 received a boost from the Federal Reserve (Fed) yesterday, with the break through 6186 bringing about a more bullish outlook after recent declines.

The recent selloff took us into and below the 61.8% Fibonacci support level last week, yet we are starting to now see the wider bullish trend coming back into play once again. The big question here is whether we continue to rebound and ultimately regain the 6515 level. That remains to be seen, with markets likely to continue following the direction of coronavirus cases as a gauge of whether a second wave is impending. For today, we are finding support from the breakout level of 6186. The ability to remain above that level would point towards further gains, whereas a breakdown below the 80 threshold on the four-hour chart could bring another bout of downside.

DAX rebounds after Fed action

The DAX has similarly surged after the Fed provided further supportive actions for the markets, raising risk sentiment.

The break through 12,172 brings an end to the recent trend of lower highs, with price now finding support on that level. Once again, we could see a pullback if the stochastic falls back out of overbought territory. However, the big question is whether this is really the end of the selloff, or if this is simply a retracement of the wider declines. The most obvious way to find that out would be a break through the 12,938. Until then, the reaction to Fibonacci resistance levels at 12,321 and 12,619 will provide information as to whether we are currently in a retracement or recovery mode or not.

Dow Jones easing back after recent gains

The Fed-inspired Dow rally has taken us back through Friday's peak of 25,959, with the index attempting to regain lost ground.

Again, we do not know whether this is a retracement of the wider decline from 27,633, with second wave fears having the potential to resurface before long. Up above, watch out for how we respond to the 61.8% and 76.4% Fibonacci resistance levels if they are reached. Once again, a break below the stochastic 80 threshold could provide a signal that the index is set to move lower.

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