Levels to watch: FTSE, DAX and Dow

The rally goes on, with indices moving above recent highs, with so far little sign that gains are coming to an end.

German stock exchange
Source: Bloomberg

FTSE 100 seeks to add to gains
Strength here continues to confound overeager bears, with the index pushing above the highs seen on 22 February around 6060. A close above this level continues to point to more gains, with a bounce towards 6128 the next area to watch for.

Above here, we would be looking towards the late December high at 6300. Support in any pullback is likely around the 50-day simple moving average (SMA) at 5960, but so long as the FTSE holds above 6000, the breakout from the downward channel of the last few months remains a very bullish indicator.

DAX strength may allow a test of key areas
The surge in the DAX this morning puts us on course to test the key area from 9500 up to 9600, where the bounce faltered on Monday. A break through here then targets the 50-day SMA at 9780, and then on towards 9840, the key area where gains petered out at the end of January.

Any pullback may find support around 9250, but sustained price action below this would signal a move lower has begun. Nonetheless, a strong close today would signal more strength heading into the first part of March.

Buy on dip appears to be best Dow strategy
Today’s price chart sees the Dow Jones moving firmly above the 50-day SMA, with targets at 16,937 and then 17,140 now in sight. Buy on the dips appears to still be the most valid approach here.

With intraday charts sharply overbought, and it being a Friday, it might be sensible to wait for a pullback, perhaps to 16,600, rather than trying to chase this move. However, it still seems that more gains are on their way, so an ability to wait for another dip is likely to be rewarded.

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