Key index levels: technicals for FTSE, DAX and Dow

The failure to establish a close through 6900 on the FTSE, along with the overbought signal on the daily relative strength index, has seen the sellers come in again. 

FTSE price action testing 6828 level

For now the price action appears to be testing, but remaining above, the 6828 level which has served as a pivotal level in the past. Should this fail, one would expect to see the 6800 level rescue the downside.

With prices now below the 200-hour moving average, I think the 6770-5 level will be of utmost importance to the direction of the index.

A break back towards the 6900 level would target 6988.

DAX pulls below 9600

When a price breaks out through a long term resistance level and then makes a hasty retreat back, it’s often a fairly bearish signal. This has occurred on the DAX over the past few trading sessions.

Having breached the January highs from an intraday perspective, the DAX has now pulled back below the 9600 level – the weekly RSI is indicating a fairly aggressive degree of bearish divergence too. This, coupled with the last week’s shooting star candle, tends to indicate that we may see lower lows before another attempt at breaking higher.

The 50-day moving average at 9500-10 may be the supporting metric today should we see a break-down of the 200-period MA level around 9530-5 on the four-hour chart, which coincides with the trendline support from 15 April lows. Below that lies the 9465 level.

Dow tests 50-DMA

The Dow Jones is testing the 50-DMA presently and this has helped to support the index fairly well since mid-April, so it will be worth watching if last week’s lows around 16,395 fail to support action.

Again, the weekly RSI is indicating negative divergence. So should the downside move garner legs, then the 16,000 level (bottom of the current range since February) may feature.

This will only occur if the 200-DMA fails to lend support and the coinciding trendline support from November 2012 is still very much intact.

On the intraday, a drop below the 16,400 targets 16,360.

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