Levels to watch: FTSE, DAX and Dow

The market is surging again as the Federal Reserve strikes the right tone at its latest meeting.

Federal Reserve chair, Janet Yellen
Source: Bloomberg

FTSE 100 hits record highs

New record highs for the FTSE this morning confirm the rally is back on. Bulls now have the difficult task of discerning whether we will get a pullback or move higher from here. First line support would be found around 7394, the previous high, but buyers should not be unduly disturbed if a bigger pullback takes us back to 7360 or 7340 – areas where buyers stepped in this week.

It would take a move below the 50-day simple moving average (SMA) at 7265 to even suggest the rally has turned. Any dip above this level should be welcomed as another buying opportunity. 

DAX presents a good entry opportunity   

The DAX has stumbled at the open, falling back from highs above 12,150. As with the FTSE 100, a move back below the previous high should not be concerning since we have a powerful trend running from the February lows.

A dip towards 12,000 would be seen as an attractive entry point. From here the next areas of resistance are 12,220 and then 12,408. 

Dow facing a pullback?

Yesterday the Dow Jones broke through the descending trendline off the March highs. The new upside target is 21,150. With the index overextended to the upside on the hourly chart, we may see a pullback but this may represent the buying opportunity for those who chose to hold their fire ahead of the FOMC meeting yesterday.

While the index may falter, as long as it holds 20,777, the short-term trend aligns with the long-term, and it seems difficult to contemplate a new sell-off unless we drop back below the 50-day SMA, currently 20,362. 

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