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Levels to watch: FTSE, DAX and Dow

The US seems to be leading the way, with signs of a resurgence in the FTSE looking to create a more bullish view for European indices.

IG Analyst

Publication date : 2017-02-06T09:10:21+0000

Traders inside the New York Stock Exchange

Source: Bloomberg

FTSE breaking higher following downturn

The FTSE seems to be back in the driving seat after a period of weakness, which brought the index back below the crucial 7127 mark. The break higher from a descending channel brought price back into the key 7205 swing high which, if broken, would provide an even greater bullish bias.

However, for now, it looks like we could see some form of a pullback, which could provide us with a bullish buying opportunity. As such, a bullish short-term bias is in play, with a break back below 7127 required to negate that view.

FTSE 100 price chart

FTSE 100 price chart

FTSE 100 price chart

DAX breakout falters

The DAX has broken back into its January range, with the index failing to build on the breakout seen around two weeks ago. The support zone of 11,521-11,530 remains relevant, as highlighted by the low on 31 January. The break below trendline and horizontal support (11,602) this morning is a sign that we could see further losses, with an hourly close below 11,602 pointing towards another challenge of the 11,530 region.

But, looking at the wider picture, there is a good chance this current pullback is a short-term period of weakness before we move higher again. With the 76.4% retracement at 11,536 (last week’s low), it could provide us with a good opportunity to get long according to the wider trend.

DAX price chart

DAX price chart

DAX price chart

Dow hesitates following sharp rally

The Dow Jones is pausing off the back of a sharp financials led rally on Friday. There is a good chance the current price action is simply a consolidation ahead of another leg higher. However, there is a chance we could see a sizeable retracement, given the sharp rate of incline on Friday.

As such, an hourly close above 20,078 would provide a short-term bullish signal, yet a break back below 20,035 could point towards a short-term retracement. Ultimately, a bullish view is in place, unless we see a break back below 19,806.

Dow Jones price chart

Dow Jones price chart

Dow Jones price chart

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