Levels to watch: FTSE, DAX and Dow

European indices have been knocked back by the Greek drama, although US markets continue to look resilient as Americans return to work following their long weekend.

US traders
Source: Bloomberg

The complete breakdown in talks last night came as something of a surprise to even hardened eurozone watchers. We are used to acrimonious talks, but assume that there is always a ‘kiss and make up’ session.

Harmonious feelings were completely absent yesterday, and this has been greeted with dismay in eurozone stock markets. However, the reaction in the US has been much less dramatic and markets there remain near recent highs. The US has been more sanguine about Greece throughout the recent crisis and this pattern looks to be repeating itself.

FTSE could challenge 6740

There is little to say here that has not been said already, with yesterday’s update still relevant. So long as this index stays within its 100-point range there is little chance of major developments.

The 6900 level is still fundamentally untested as resistance, but there is no desire to take the market below 6800. A breakout from either of these is needed first, to challenge either 6934 or the 6740 zone.

DAX holds 10,800

This morning’s dip towards the 20-DMA has been firmly bought, as the index recovers from an overnight panic relating to Greece. With 10,800 also holding as support the index still remains within its own range, although the declining daily relative strength index sends a warning that not all is as it should be.

Even a break below 10,800 would still leave 10,600 as support, while only a daily close above 11,000 cancels out the rangebound trading that continues to predominate.

Dow RSI moves up

The stars continue to align for the Dow Jones to move up towards the December high. The 20-DMA is set to cross above the 50-DMA for the first time since November. Meanwhile the daily RSI continues its move higher, as buyers step in around 17,950.

The 100-hour MA propped up the index overnight, and the target on the upside is the high from Friday just above 18,000. If Greek worries were to dissipate, this would likely be enough to send the index rallying towards its all-time high. 

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