Levels to watch: FTSE 100, DAX and S&P 500

European markets have continued to try and maintain their rallies, while a push higher yesterday by the S&P 500 has run out of steam ahead of the FOMC meeting.

FTSE 100 tries to breach 7500

The FTSE 100 is once again testing the area of resistance around 7500, as it did at the end of August. This zone proved problematic a month ago, and a failure to post a daily close above 7500 would be regarded as potentially bearish in the short term, creating a lower high.

A close above 7500 could open the way to 7644, the late August high. Below 7490, the chances of a leg lower towards the September lows increases.

DAX stuck fast below 12,400

For the three sessions so far this week, the DAX has failed to clear the 12,400 zone. Dips to a low of 12,330 have however found buyers, so a break out from this circa 70 point range is needed to establish the direction of the next move.

A drop below 12,300 would suggest a bigger fall towards 12,100. A close above 12,400 would be a first step towards indicating a rally, although it would still need a push above Friday’s high at 12,461. Above here the 12,500 zone comes into play, and a clearance of that would begin to suggest that the downtrend in place since January is beginning to come to an end.

S&P 500 rally stopped in its tracks

Yesterday saw the S&P 500 attempt to close the weekend gap, but it was unable to hold the highs and has continued to edge lower.

For the time being, this is not a pullback, and looks more like a digestion of the recent move higher, plus some pre-Federal Reserve (Fed) hesitation. A move below 2910 would open the way to test the 2875 area.

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