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.

Traders
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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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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