Levels to watch: FTSE 100, DAX and Dow

A strong start to the week for European and US indices highlights the potential for a bullish breakout. However, with key resistance up ahead, we await confirmation.

Source: Bloomberg

FTSE 100 consolidation continues amid wider retracement

The FTSE 100 is turning lower this morning, in what looks like a continuation of the sideways price action seen over the past week. We need to see a move through 7405, or 7355, to signal a breakout from this short-term consolidation.

However, crucially, we are seeing a wider retracement in play, with yesterday’s price action moving into the 61.8% retracement. With that in mind, we are looking for bullish buying opportunities, with any further short-term weakness providing us with a better long position. That bullish view holds unless we move below 7195.

DAX shows signs of bottoming out

The DAX pushed up towards the crucial 13,097 resistance level yesterday, with another lower high seemingly being put in place instead. The ability to break above that 13,097 level is going to be key here, as this would bring a bullish signal.

Until then, there is a chance we could continue to trade within a symmetrical triangle formation, with the price moving lower from here.

Dow respecting trendline resistance

The Dow Jones has rallied up to trendline resistance following a sharp move higher yesterday. With the price currently moving gradually lower, this looks like it could possibly be a short-term flag formation before we move higher.

However, a bullish breakout signal would come with a move up above 23,492. Until this happens, there is still a chance of another move lower, back into the 23,300 region. 

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