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Levels to watch: FTSE, DAX and Dow

An ongoing Dow rally contrasts with notable weakness on the DAX, and a potentially worrying development on the FTSE 100. 

New York Stock Exchange trader
Source: Bloomberg

FTSE 100 on the edge of turning bearish

Yesterday saw the FTSE close below the rising trendline that has held since November 2016, and so we will watch to see whether it can break back above it today.

A failure to climb back above 7408 could be the bearish development that many have been looking for, although there is still support at 7360, 7294 and 7260. If the index does post a daily close back above the rising trendline, then the way is clear for a test of 7450 and the downtrend line off the June highs.

DAX sees a new lower low

Rallies continue to be sold on the DAX, with yesterday seeing a new low below that of Friday’s, if only just. The next areas to watch for support are 12,032 and then the 200-day simple moving average SMA (currently at 11,888).

We would need to see a move back above 12,300 to break the sequence of lower highs and lower lows that prevails at the moment. 

Dow hits a record high

A fresh record high yesterday confirms the strength of the uptrend on the Dow Jones, and we would need to see a push back below 21,700 to even consider a more bearish view.

We have seen little in the way of retracements over the past few sessions, so even a pullback to the 50-hour SMA of 21,861 could provide the dip that fresh buyers are looking for. 

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