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Levels to watch: FTSE, DAX and Dow

The indices take a more bullish stance, with FTSE leading the way, while the DAX contends with key trendline resistance.

Source: Bloomberg

FTSE breaks through resistance in search for new highs

Yesterday saw the FTSE 100 break through the key 7359 resistance zone, in a breakout which followed the inability to complete a bearish head and shoulders formation last week.

The top of yesterday’s trade came around trendline resistance and the left shoulder high. However, we look set to challenge that 7400 region once more this morning, Given the current creation of higher highs and higher lows, a bullish outlook is in play unless we see a break back below 7331.

DAX rallying from Fibonacci support

The DAX is pushing higher this morning, following a sell-off into the 61.8% retracement and trendline support yesterday. The subsequent rally has brought us back to trendline resistance, which is accompanied by the 50-period simple moving average (SMA).

Essentially the downturn of April so far has been seen as a retracement of the rally from 11,850. As such, a bullish view was always expected to come back into play soon. Confirmation of that coming to fruition would be an hourly close above 12,283, which would point towards a rally into 12,387 and 12,408 resistance. Conversely, should we see trendline resistance hold, another move lower would be seen as a good opportunity to look for longs at a more advantageous price.

Dow rallying from range bottom

The Dow Jones sold off sharply following the creation of intraday lower highs and lows yesterday. This took us into the key 20,515 support level, which held once more. With the price having created a new high and higher low since, it is clear that a move back towards the top end of the range looks likely from here.

It makes sense to play this range until we see the breakout. The medium term direction of the Dow will be dictated by the eventual breakout from this 20,515-20,756 range.

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