Levels to watch: FTSE 100, DAX and Dow

The Dow is pushing higher in a meaningful manner, helping further the view that we have bottomed out. Meanwhile, both the FTSE 100 and DAX are testing key resistance levels after recent gains.

FTSE 100 heading higher after recent breakdown

The FTSE 100 is heading higher following a short-term breakdown, raising hopes that the wedge sell-off seen earlier in the week could already be over.

A break through 7772 would pave the way for further upside, with the 76.4% Fibonacci resistance coming into view. There is still a chance that we could be looking at a retracement before we sell-off once more. However, for the time being we are looking at the 7772 mark as a precursor to further upside. Only a break above 7903 would signal the confirmation that the period of weakness seen in late May is over.

DAX back at Fibonacci resistance

The DAX has managed to rally back into the 76.4% retracement, following some fairly volatile consolidation over recent days. The ability to break above this 76.4% retracement is going to be key in determining whether we will continue to recover recent declines.

However, should we continue to respect this resistance level, there is still a wider downtrend in place which could come back into view. A break above 13,038 would signal the end of that wider downturn and confirm the bullish outlook instigated by the recent double bottom formation. Thus far we appear to be respecting the 76.4% once more, and therefore it is worth looking out for how we respond to that level as a means to dictate bias in the near term.

Dow continues to outperform

The Dow Jones has pushed higher once more, with the rally through 24,914 paving the way for a bullish breakout following a period of uncertainty.

With the break above 25,083, the view that we had bottomed out has certainly gathered steam, and thus further upside seems likely. That being said, with the price having pushed upwards in such a strong fashion, be aware of the potential for a retracement before long. We would need to see a break below 24,222 to negate the wider bullish outlook for the index. 

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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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