FTSE 100, DAX and Dow rally ahead of ECB decision

FTSE 100, DAX and Dow push onwards after a rally through key resistance level.

Trader Source: Bloomberg

FTSE 100 rallies through resistance to bring bullish outlook

The FTSE 100 managed to rally through 7326 and 7350 resistance yesterday, bringing about a more positive outlook for the index.

The prior head and shoulders formation failed to really gain traction, with that total retracement amounting to a 38.2% move. With the price having broken through resistance since then, we are looking at further upside to building on the bullish break seen when we overcame the 7305 level at the start of the month. With that in mind, further upside is expected, where a pullback would be seen as a retracement to buy into unless we see the price fall below 7199.

FTSE 100 chart Source: ProRealTime

FTSE 100 chart Source: ProRealTime

DAX rally continues, with major resistance in sight

The DAX has enjoyed an incredible month, with the index rallying sharply in anticipation of a wide-ranging easing package from the ECB today.

Expect volatility as a result, with Mario Draghi likely to provide the directional bias in the afternoon. The recent break through 76.4% Fibonacci resistance highlights the potential for a breakout into a wider bullish picture, with a rise through 12,602 needed to bring about such a move. Conversely, a break back below 12,179 would signal the potential for a more bearish phase coming into play.

DAX chart Source: ProRealTime

DAX chart Source: ProRealTime

Dow rises into crucial resistance level

The Dow Jones is in a similar picture to the DAX, with the price having broken through Fibonacci resistance to rise towards a crucial breakout level (27,403).

A break through there would bring a clear wider bullish picture on the longer-term charts. With the price starting to ease back, there is a possibility of a retracement over the coming hours, yet any weakness would need to see a break below 26,714 to negate the current uptrend. Until that happens, further upside is expected before long. Bear in mind, expectations of the Federal Reserve (Fed) action will also be driven by the European Central Bank (ECB) action or inaction. Thus, keep a close eye out for the ECB meeting as both a provider of short-term volatility and future Fed expectations.

Dow Jones chart Source: ProRealTime

Dow Jones chart Source: ProRealTime


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