Levels to watch: FTSE, DAX and Dow

Short-term weakness looks unlikely to last, with retracements across the FTSE, DAX and Dow pointing towards another break higher.

Wall Street
Source: Bloomberg

FTSE sell-off could provide long opportunity

The FTSE continues to move lower, following on from yesterday’s inability to sustain price above the previous peak of 7314. With a very substantial support zone below, at 7251-7260, there is a good chance this current weakness will resolve into another break higher soon.

As such, any pullback towards the 7268 region looks like a good opportunity for longs, with a break below the 7251 level negating that bullish short-term sentiment.

DAX retracement likely to be fleeting

The DAX pulled back and bounced upwards from the 76.4% retracement on Friday. With the temporary break through 11,848, we have seen some weakness coming into play this morning.

However, the price is now starting to regain ground, in what apppears to be a sign that we could be looking at another leg higher for the index. Ordinarily a break through 11,861 would provide a renewed bullish signal. But with the key 11,893 resistance in close proximity, it is worth being wary until we see a break through that key resistance level. 

Dow consolidation expected to lead to bullish break

The Dow has been trading in a shallow falling wedge pattern, following on from an incredible uptrend over recent months. Given the overwhelmingly bullish trend, we are looking for longs once more.

On this occasion, it seems unlikely we will see a sufficient retracement to hit the 70% or 76.4%. Should we see a shallow retracement, the bullish signal comes with an hourly close above 20,690. A break back below 20,527 would negate this bullish view.

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

This information/research prepared by IGA or IG Group is intended for general circulation. 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 or 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. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.

Find articles by writer