FTSE 100, DAX and Dow bounce off major support zones ahead of FOMC

FTSE 100 gunning for early January high

The FTSE 100’s drop to its current January low at 7226 has been followed by an inside yesterday, the break out of which to the upside earlier today is a bullish signal.

Above this week’s high at 7495 beckons the early January high at 7530. If overcome, this year’s high to date at 7635 will be back in the limelight, together with the pre-pandemic December 2019 and January 2020 peaks at 7680 to 7690.

Minor support can be seen between the early December high, 31 December low and the 55-day simple moving average (SMA) at 7379 to 7355.

DAX bounces off low and tries to slice through downtrend line

On Monday the DAX briefly slid to a four-month low at 14839 and on Tuesday consolidated above it by forming an inside day.

This chart formation occurs when the day’s bar (or candle on a candlestick chart) fits within the previous day’s bar, i.e. it has a lower high and a higher low than the previous day and thus denotes indecision. When, as was the case earlier this morning, a breakout of the inside day to the upside is seen, the implication is bullish.

The DAX is now breaking through its one-week accelerated downtrend line at 15374 with the last reaction high at 15590 being firmly in view. Further up potential resistance can be spotted between the 55- and 200-day SMAs and the 10 January low at 15673 to 15725.

Minor support below today’s low at 15132 comes in at the 20 December low at 15060.

Dow in recovery mode

The Dow's January descent has taken it all the way down to this week’s low at 33146 before stabilising.

A rise back towards the 200-day SMA at 35161 is now on the cards. The next higher 10 and 14 January highs as well as the 55-day SMA at 35591 to 35643 will need to be bettered, though, for the January peak at 36955 to be back in focus.

Slips below the 21 January and today’s low at 34269 to 34219 should find support at the 33951 December low.