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Levels to watch: FTSE, DAX and Dow

The FTSE leads the way once more, helped by a weakening pound. How long will the recent UK-US divergence last?

IG Analyst

Publication date : 2017-01-16T09:22:02+0000

Traders in a German stock exchange

Source: Bloomberg

FTSE 100 pullbacks provide long opportunity

The FTSE has pushed higher once more, aided by the sterling weakness evident through the Asian session. We have seen the index pall back to the 76.4% retracement at the open, with price rallying since.

As long as we do not see the index drop back below 7308, a bullish outlook remains in place for the creation of new highs.

FTSE 100 price chart

FTSE 100 price chart

FTSE 100 price chart

DAX heading towards range bottom

The DAX has taken a turn for the worst this morning, falling into the 11,523 support level in early trade. With the FTSE having bounced from the 76.4% retracement, there is a good chance we could see the DAX rallying from the range bottom.

That said, given the sell-off into 11,490 late last week, there is a possibility of a move below 11,523 to continue the creation of lower lows. The ability or inability to maintain price action above 11,523 will be key to determining the answer to that question.

DAX price chart

DAX price chart

DAX price chart

Dow weakening from Fibonacci resistance

The Dow Jones is testing a key support level after selling off from the 76.4% retracement on Friday. The 19,848 level is going to be crucial in determining whether we will see short-term losses today, with an hourly close below this level likely to spark further downside.

As such, the 19,848 level will be crucial to whether we see a bounce of not in the short term. There is a chance of a retracement higher, yet given the wider trend, it is likely to be a short-term affair. For the bullish outlook to come back into play, we would need to see a break through 19,953.

Dow Jones price chart

Dow Jones price chart

Dow Jones price chart

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