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FTSE 100 underperforms, as the DAX and Dow push higher

FTSE 100 underperforms, as a strong pound holds the index back amid gains across the DAX and Dow.

FTSE 100 consolidates after brief decline

The FTSE 100 has been consolidating off the back of yesterday's sharp pullback. The shallow and gradual nature of this ascent points towards a likely next leg lower before long.

Until the Dow and DAX, this index is being held back by a resurgent pound, and thus it makes sense to watch out for forex markets to help dictate whether this lag will continue today. With the Bollinger band currently tightening, watch for this pause in volatility to be punctuated by another sharp decline if only to provide a deeper retracement of the rally from 7110. A break through 7259 would be required to negate this bearish outlook.

DAX drives higher yet again despite yesterday’s pullback

The DAX continues to outperform despite questions over the validity of the claims of a US-China trade deal, with the index driving higher to negate the retracement seen yesterday.

This points towards further upside to come, with the index hitting a two-month high in early trade today. These gains take us into a resistance zone where a break through the 12,662 level would be required to take us into a more comfortable area for bulls. As such, the bullish recovery continues, yet it is worthwhile approaching with caution until we see 12,662 broken.

Dow turning higher from SMA support

The Dow Jones is strengthening following a retracement into the 200-period simple moving average (SMA) support line.

That indicator has provided previous resistance, and thus it makes sense to look at it as a possible reversal point once again. With the price pushing upwards, a break through 27,016 would bring about a more confident bullish outlook for the index. Given the size of prior rally, there is still a risk that we could see a wider retracement come into play after the shallow move lower yesterday.

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