Levels to watch: FTSE 100, DAX and Dow

A dovish appearance from the Fed chair Powell helped boost stock markets, with the US understandably feeling the full force of that shift. Nevertheless, this is helping build hope that we could see the end of recent selling pressure, both in Europe and the US.

FTSE 100 rallies through key resistance level

A dovish appearance from Federal Reserve (Fed) chair Jerome Powell yesterday provided a welcome boost for stock markets, with the FTSE 100 rallying back up into the 7059 mark. The ability to break convincingly above that level provides us with a more bullish outlook for the index.

With the price looking primed for another move higher, short-term weakness is likely to be a retracement of the rally from 6911. Thus, further upside is expected before long, with a drop below 6911 required to bring a more bearish outlook.

DAX rallies into SMA resistance

The DAX managed to rally through trendline resistance once again, finding the 200-day simple moving average (SMA) and 61.8% Fibonacci level one step too far for now.

With the index easing back somewhat, the ability to remain above 11,274 will be crucial. A drop below that level would point towards a retracement of the rally from 11,090 coming into play. For another leg higher, we need to see this confluence of resistance overcome.

Dow showing signs of potential wider recovery

The Fed has helped the Dow Jones more than most, with the index posting a blockbuster session yesterday. A break through the 25,511 mark would go some way to helping build a story of a wider recovery.

However, given the size of the recent rally, it wouldn't be a surprise to see the index ease back a little. Thus look for a break through the overnight highs to point towards another leg higher, with a break through 25,511 providing greater confidence that this move will last.

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