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Levels to watch: FTSE, DAX and Dow

European and US indices appear to be heading in alternate directions, with the FTSE and DAX looking increasingly bearish, as the Dow flounders.

anonymous

Publication date : 2017-03-30T08:54:52+0100

German stock exchange

Source: Bloomberg

FTSE rallying after overnight consolidation

The FTSE 100 is pushing higher off the back of a short-term pullback overnight, with the price heading towards yesterday’s high of 7385. An hourly close above that level would provide a bullish signal for another leg higher.

Despite the price trading within a typically bearish wedge pattern, such a breakout would largely negate the formation. Conversely, a failure to break through 7386, followed by an hourly close below 7367, would provide a bearish outlook for a move back into trendline support (currently 7334).

FTSE chart

FTSE chart

FTSE chart

DAX pullback unlikely to last

The DAX is moving lower this morning, following a bullish triangle breakout overnight. For now, the trendline support is being respected, yet as long as we do not fall below 12,164, this pullback is seen as a buying opportunity.

It is worth noting the huge resistance level up ahead at 12,408, yet for now we look likely to continue gains until we get to that area. A break back below 12,164 would provide us with a warning sign of a potential impending period of weakness.

DAX chart

DAX chart

DAX chart

Dow continues to lag Europe

The Dow Jones remains a laggard among the indices, with the price trending lower since the 20,735 high on Tuesday evening. We have seen trendline resistance respected in that time, with the price needing to break through the 200-hour simple moving average (SMA) and trendline resistance if we are to see a resurgence.

Ultimately, we would need an hourly close above 20,735 to bring back a more bullish view for the index. Until then, this drift lower looks likely to continue.

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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