Key index levels: technicals for FTSE, DAX and Dow

Indices in the UK and Europe have been knocked back this morning, as a result of the escalating crisis in Iraq.

Mark Carney
Source: Bloomberg

Carney's comments weigh on FTSE

Mark Carney’s hint of higher rates has caused UK indices to drop back this morning, and the FTSE 100 is now heading towards 6800.

However, look out for support around 6790, which was the pre-ECB low from last week. A bounce from here means the index may move back towards 6870, as the ongoing low-volume rangebound trading persists.

If 6790 is broken then 6770 is the next support to watch for, but it would take a serious breach of the 200-day moving average to suggest that the FTSE is moving back to 6500, the big low from March and April.

DAX could return to 10,000 level

DAX bears should be careful as we head to 9860, the lows of the first week of June.

Three down days have carried the index out of overbought territory on a daily chart, but the overall picture still suggests a move back towards 10,000. Any probes towards 9800 should bring the buyers out once again, particularly on optimism that a declining euro should do wonders for German exporting companies.

A drop through 9860 means we are about to retest 9750 on an hourly chart, but this would leave the DAX in oversold territory, yet another signal to nervous buyers that an entrance point is in the offing.

Dow heading towards 16,670

The Dow Jones looks to be gearing up for a move to 16,670 once again, as it works off its overbought condition post the ECB and non-farms. Just below this is the 50-DMA, and dip buyers will view a test of this level as yet another opportunity.

All thoughts of seeing 17,000 in the very near future have been abandoned, but that does not mean the rally is under threat just yet. This is an index that has seen many modest selloffs that have failed to evolve into full-blown corrections, and this current move lower seems to be developing in a similar pattern.

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