Levels to watch: FTSE, DAX and Dow

After yesterday’s selling, indices have stabilised, but it looks like the bears now have the upper hand.

US trader
Source: Bloomberg

FTSE fails to continue beyond 6800

The index now finds itself back below the 200-day SMA (6756), having failed to make any progress beyond the 6800 level. Daily stochastics are poised to turn bearish, which would be the final piece of the puzzle for sellers — downside targets lie in the direction of 6650, and thence on to the 6600 area.

It will be particularly interesting to see if the index can get back below the downtrend line from late May, since this would suggest that a test of the lows around 6450 is on its way. 

DAX could see intraday bounce

The rally in eurozone indices looks to have run its course, with DAX daily stochastics turning bearish, and the 20-hour EMA (11,553) moving below its 50-hour counterpart (11,625). As such, I would be looking to sell intraday rallies in this index, and in other European indices.

For the DAX, hourly stochastics remain at heavily oversold levels, so an intraday bounce is likely to materialise. Any failure to move back above 11,600 is still going to be the signal for more downside, with an initial target around the 50-day SMA at 11,378. 

Dow could target 200-day SMA

The Dow Jones has failed to break through the downtrend line running from the all-time highs in May, and as with other indices daily stochastics have turned bearish.

What looked like a potential consolidation yesterday now seems to be more of a top, with a first target on the downside of the 200-day SMA at 17,793, and then on downwards to the July lows around 17,500. 

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.