Levels to watch: FTSE 100, DAX and Dow

European markets are attempting to continue their gains following a rebound from key support levels. Meanwhile, the Dow is slowing its ascent after a crucial resistance break.

FTSE 100 continues to regain ground

The FTSE 100 has been regaining ground over the past few trading days, with the price rebounding from the crucial 7489 level. With the wider range topping out between the 7706 and 7796 level, there is a good chance we will continue to regain ground over the near term.

The fact that we dropped into the 7489 level does raise the potential for a breakdown for the index. However, as long as we do not break back below that support level, there is a good chance of further upside over the near term.

DAX rebounding from crucial 12,102 level

The DAX has also managed to rebound from a crucial support level, with break below the 12,102 mark pointing towards a wider breakdown for the index. Given that we have not seen that break occur, there is a strong chance we will see further gains over the near term.

It is worthwhile watching for the 76.4% Fibonacci resistance (12,378) as a gauge of whether we will follow through on this initial bounce. A rally above that level and 12,462 would raise confidence that we will see this upside extend further.

Dow uptrend slowing after key resistance break

The Dow Jones managed to break above the 25,693 level on Friday, negating the previous break below 25,114. This points towards further upside for the wider, longer-term picture.

For now, we are seeing the index slow in its ascent but this does not necessarily mean that we are about to reverse lower. However, given the size of recent gains, a break back below that 25,692 level would look likely to provide a period of downside for the coming week. Until then, further upside remains the base-case.

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