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Levels to watch: FTSE 100, DAX and Dow

European markets are trying to recover ground on the Dow, yet with the FTSE 100 and DAX coming into potential periods of consolidation, we are awaiting key breaks to signal further upside.

anonymous

Publication date : 2018-08-23T09:49:36+0100

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FTSE 100 rebound floundering

The FTSE 100 failed to rally through the 7618 level yesterday, following a bounce from the 61.8% Fibonacci support level.

With the price subsequently failing to break below that 7520 low, we are in consolidation mode currently. Watch for a break through the 7618 or 7520 level for a signal of where we go from here. However, a downside break may represent a shift into the 76.4% retracement rather than the start of a wider bearish phase.

FTSE 100 chart

FTSE 100 chart

FTSE 100 chart

DAX rallying towards key swing high

The DAX is rebounding towards the 12,462 swing high, which should provide us with a gauge of whether this rebound is set to persist.

An hourly close above there would signal a likely move into the 61.8% Fibonacci (12,593) level at the least. That inability to break below the 12,102 support level last week provided a question mark over the uptrend, but failed to give us a bearish signal. Thus we cannot say with great confidence whether this is a retracement or full recovery. This will only come with a break above 12,888, or the respect and bearish reversal from Fibonacci resistance.

DAX chart

DAX chart

DAX chart

Dow rebounds from crucial support level

The Dow Jones has managed to bounce from the key 25,680 support level, following a period of weakness that has threatened to bring about a more protracted period of downside.

Whether we see an hourly close below that 25,680 level will provide a key clue as to whether we are going to see a retracement of the wider 24,963 rally or simply carry onwards from here.

Dow Jones chart

Dow Jones chart

Dow Jones chart

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.

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