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Levels to watch: FTSE 100, DAX and Dow

Indices push higher, yet the US leads the way as the FTSE 100 and DAX reach key resistance levels.

IG Analyst

Publication date : 2018-07-10T09:38:47+0100

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FTSE 100 rallies into key 7706 resistance

The FTSE 100 managed to rally back into the 7706 resistance level yesterday, following on from the rebound at 7543 support. This continues a range that has been in play for some time yet, with that one break below 7543 providing the outlier.

Besides that, we have seen the FTSE 100 trade within the 7706-7543 boundaries for over three weeks now. Conversely, we could be looking at a complex inverse head and shoulders formation, with a break above 7706 providing the bullish breakout signal. In either case, that 7706 level remains a key determinant of future price action. We either reverse lower from here or break into a bullish phase, depending on the response at this level.

FTSE 100 chart

FTSE 100 chart

FTSE 100 chart

DAX turning lower from breakout level

The DAX rallied into the crucial 12,606 resistance level overnight, yet is subsequently drifting lower. A rally through that level would signal the beginning of the next leg higher.

However, with the price seemingly heading lower from a rising wedge formation, we could be set for short-term downside in this index. Watch for a break below 12,489 as a signal of such impending downside. Such a move would be perceived as a short-term sell-off within a wider recovery story. We would need to see a break below 12,283 to negate the bullish outlook that is now in play.

DAX chart

DAX chart

DAX chart

Dow extends triangle breakout

The Dow Jones has managed to maintain its bullish impetus, with the triangle breakout seen last week providing a sharp appreciation in the index.

With the price drifting lower this morning, there is a chance we could see a retracement of the 24,551-24,892 rally. Thus, a bullish outlook remains unless we see a break below the 24,551 swing low.

Dow Jones chart

Dow Jones chart

Dow Jones chart

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