Levels to watch: FTSE 100, DAX and Dow

Global indices have been drifting lower after yesterday’s hawkish Fed meeting. However, with recent trends remaining intact, this could be a good time to look for a bounce in European and US markets.

Wall Street
Source: Bloomberg

FTSE 100 falls back into trendline support

The FTSE 100 has dropped into trendline support overnight, following a hawkish meeting from the Federal Open Market Committee (FOMC). Today sees the emphasis shift onto the European Central Bank (ECB), where we could see a similarly hawkish shift towards ending quantitative easing (QE).

For now, the FTSE 100 remains within a trend of higher lows and flatlining highs. As such, a bullish outlook is in play following the fall into a deep retracement. The current candle is highlighting the respect of that trendline which dates back to November 2016. A bullish view is in play for a move back into the 7761-7772 region. A break below 7638 would negate this.

DAX retracement likely to be short-lived

The DAX has similarly seen downside overnight, bringing the index close to yesterday’s 12,779 low.

A break below that level would simply look like a retracement of the 12,611-12,956 rally, at which point we will utilize the Fibonacci levels for a bullish entry. Until then, the ability to remain above 12,779 should signal whether we are set for a push higher or drift lower in the short term.

Dow drops below Fibonacci support

The Dow Jones has managed to break lower following a slow in the recent uptrend, as signified by the break through trendline support.

The price has since broken below the 76.4% retracement, highlighting the potential for a further breakdown. Nevertheless, there is still a strong chance that we will see this uptrend come back on track with a rally from here. A break below 25,075 would provide that bearish signal, and until that happens a rebound seems likely. 

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