FTSE 100, DAX and Dow ease back within recent uptrend
FTSE 100, DAX and Dow fall back towards trendline support, with recent rally likely to come back into play before long.
FTSE 100 pulls back into trendline support
The FTSE 100 has eased back overnight, with the index dropping into trendline support. That ascending trendline has underpinned much of the price action seen throughout the past month, and this looks likely to occur once more today.
The stochastic has dropped out of a tight overbought phase, but is now start to slow its decline as we approach the key 20 threshold. Given the current respect around this support line, it makes sense to watch for further upside to continue the recent bullish trend. A break below that level would start to build a potential short-term topping pattern, yet things remain bullish for now.
DAX downside unlikely to last
The DAX has also drifted lower overnight, with the index seemingly in retracement mode following a bullish surge over the course of the first three days of June. That bullish trend remains the key driver here, with the drop into oversold on the stochastic likely to bring about another leg higher before long.
To the downside, we still have an ascending trendline which could provide support if necessary. A break up through the 20 threshold on the stochastic could provide a good buying opportunity as we look for an extension of this recent rally. Much like the other markets here, even if we did see a short-term pullback, it would simply look like a retracement of the recent rally.
For the DAX that means a bullish outlook being in play as long as the price remains above 11,516.
Dow Jones falling back towards ascending trend
The Dow Jones is similarly pulling back this morning, with the index closing in on trendline support within a clear uptrend. The drop in the stochastic oscillator is taking us back towards the 20 threshold.
Thus, much like the FTSE 100 and DAX, there is a good chance we will see momentum turn back towards the upside in line with the wider- and short-term trends. As such, while we could see short-term declines, it is likely we will turn higher once more given the uptrend in play.
A rise back through the 20 threshold on the stochastic could provide one such buying opportunity, with the respect of trendline support also a key potential event to watch out for.
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