Technical analysis: key levels for FTSE, DAX and Dow

Services PMI day has not been universally bullish for indices, with the main UK, German and US indices still trading in a cautious consolidation zone after their heavy losses last week.

A man looking at a chart
Source: Bloomberg

FTSE testing 200-DMA

We’re seeing another test of the 200-day moving average this morning, just above the 6700 mark, and it remains vital for any FTSE upside to see the index break it. The FTSE has steadily clawed itself higher over the past three sessions, with a small bounceback in the daily relative strength index an encouraging sign for those of a bullish disposition.

The hourly chart shows a more substantial bounce through the 50-hour MA, but the crucial part will be a close back above yesterday’s highs around 6717.

A clearance of this level would put the index on a slightly more positive footing, but any failure could see another attempt to drop through 6660.

DAX daily RSI oversold

A small bounce for the DAX this morning still leaves the index wallowing well below the 200-DMA. If it can hold above 9200 it then needs to clear 9270, as Brenda pointed out yesterday. The daily RSI is still flashing an oversold reading, so the potential for more gains is still there, but it needs to recover the long-term trendline from the 2011 lows for a more bullish picture to emerge.

On the hourly chart the DAX is trying to push through the 50-period MA, something it needs to do to be in with a hope of building a recovery.

Dow eyes 100-DMA

The 16,500 held yesterday on the Dow Jones, with a modest recovery in progress on the hourly chart from the lows of last week. As with the FTSE 100, it needs to clear the highs from yesterday as a first step to further gains.

The move back above the 2012 trendline sends a cautiously optimistic signal, while the daily RSI is just climbing out of oversold territory, but a bullish crossover in moving average convergence/divergence is still lacking.

The first step will be the recovery of the 100-DMA, with a move above here targeting the 16,710 zone. Any drop below will need to clear the 200-DMA, currently around 16,365.

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.