Levels to watch: FTSE, DAX and CAC

US markets are out of the picture today for Presidents Day, so we can expect lighter volumes during the session, as buyers look to continue Friday’s bounce.

Trader reflected in digital data board
Source: Bloomberg

FTSE 100 may challenge all-time highs again

Friday’s bounce in risk appetite proved there is life in the current rally yet, with moves higher across major indices restoring the bullish outlook. In the UK, Kraft’s (now abandoned) bid for Unilever helped to add around 13 points to the index. Early on in the session today we have seen the price start to nudge through last Wednesday’s high around 7315, so if this continues the run at the all-time high at 7360 is back on.

The uptrend off the February low held, with the price dipping towards, but not actually testing, the trendline. Bears need to get the price back below 7260, which has acted as very strong support on the hourly chart over the past week. 

DAX bulls to target last week’s high

Having looked slightly unwell on Thursday, the risk rally rebounded here too. However, unlike the FTSE 100 the DAX failed to break the high of last week (11,850), so this is the first job for bulls. A move above here targets the late January high at 11,900.

Dip buyers may want to wait for another drop, perhaps down to the 11,720 support line. Sustained activity below this would be needed to suggest a new downward move is beginning. 

CAC rallies

The divergence between the DAX and CAC due to the uncertainties caused by the French election were clearly seen last week. Although the French index rallied off its lows, and posted an impressive textbook bounce off the 200-hour simple moving average (4857), it is still far away from last week’s high around 4940.

The areas to watch for further strength are 4920 and 4940. Above here, 5000/5020 becomes the area for look out for potential resistance, marking the November 2015 highs. 

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