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Levels to watch: FTSE, DAX and Dow

Divergent fortunes for European and US markets look set to continue apace, with the Dow pushing higher amid a weakening of the FTSE and DAX.

IG Analyst

Publication date : 2017-07-28T09:18:26+0100

Trading floor figure

Source: Bloomberg

FTSE continues to drift lower

The FTSE is declining once more this morning, following a flatlining low and failure to create a new high. That is worrying, and a break back below 7356 would point towards significant losses.

However, for now, it is worthwhile watching for a potential period of consolidation, with the 76.4% retracement below at 7387. Given the somewhat sideways nature of recent price action, the stochastic could become more useful, with a break back above the 20 mark providing a bullish short-term signal.

FTSE chart

FTSE chart

FTSE chart

DAX turns lower following wedge

The DAX rolled over as expected yesterday. However, this sell-off has proven to have legs, with the price breaking a new low below 12,140. That is a worry for the medium-term picture, as it largely negates the respect shown to the 76.4% retracement at 12,180.

For a wider bearish view to come into play we would need to break below the 11,942 mark. However, for now, a short-term downtrend is clearly in play, with a break up above 12,344 needed to point towards a rally back into the previous high of 12,952.

DAX chart

DAX chart

DAX chart

Dow expected to continue its rise

The Dow Jones has continued its ascent overnight, with any pullbacks being bought into. We are seemingly moving higher from the bottom of its recent channel, and as such, a bullish outlook remains valid.

A break back below 21,689 would be required to negate this bullish outlook. That figure would shift upwards to 21,740 should we break to a new high above 21,805.

Dow Jones chart

Dow Jones chart

Dow Jones chart

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