Levels to watch: FTSE, DAX and Dow

Despite further weakness yesterday, there are signs that we could see the indices pick up somewhat today, with the FTSE, DAX and Dow all respecting key support levels.

IG Analyst

Publication date : 2017-04-20T09:37:34+0100

DAX trader

Source: Bloomberg

FTSE stays above key support

The FTSE is rebounding from the key 7091 support level this morning, following another leg lower yesterday. That support level is going to be crucial in determining how the forthcoming weeks are going to look.

Essentially, we are looking for either an hourly close below 7091 for a bearish signal, or an hourly close above 7152 for a sign that we are heading for a rebound.

FTSE chart

FTSE chart

FTSE chart

DAX attempting to regain ground from Fib support

The DAX has been consolidating around the 76.4% retracement over the past 48 hours, as we seek to ascertain whether the market is going to bottom out before rallying once more.

Interestingly, we saw last week’s low of 12,041 provide support overnight, thus giving us a curious resistance level to watch this morning (12,041). As long as we remain above 11,850, it looks likely that we will see a rebound for this market. Over the short term, a break back above 12,041 would provide us with a small double bottom and likely push higher.

DAX chart

DAX chart

DAX chart

Dow looks set for short term rebound

The Dow Jones has sold off into a new low yesterday, following yet another lower high. This has formed a falling wedge, which is typically a bullish pattern. With that in mind, there is a good chance we could rebound back towards the higher end of this pattern.

The envelope used below seems to have picked up the bullish reversal points well and, given the brief foray below that indicator, there is reason to believe we will see the price reverse following a drop to extremes. As such, while we could see further downside in line with the continued creation of lower highs and lower lows, the current picture looks likely to spark a rally towards the 20,515 region.

Dow Jones chart

Dow Jones chart

Dow Jones chart

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