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Levels to watch: FTSE 100, DAX and Dow

European and US indices appear to be turning a corner, with the DAX leading the charge higher amid initial signs of potential strength from the FTSE 100 and Dow.

anonymous

Publication date : 2017-09-07T09:39:20+0100

Stock exchange

Source: Bloomberg

FTSE 100 regaining ground after recent sell-off

The FTSE 100 managed to break back up above the 7358 level yesterday, bringing into play the potential for a bullish reversal. Considering that the index has been largely rangebound over recent weeks, there is a good chance we could see another move lower towards the lower bounce of the pattern (7300).

However, it makes sense to watch for the breakout from this 7344-7374 consolidation zone to gauge whether we are due to see this turn into a bullish reversal, or simply a retracement before we move back towards the lower end of this recent 7300-7440 range.

FTSE 100 price chart

FTSE 100 price chart

FTSE 100 price chart

DAX consolidating at crucial resistance level

The DAX broke through trendline resistance yesterday, pushing above the 12,276 swing high to reach the crucial 12,300 level. This is a hugely significant level, which is clearly being respected ahead of this afternoon’s European Central Bank (ECB) meeting. As such, there is a good chance we could start to see the index come off somewhat, as traders reduce their exposure ahead of the meeting.

However, the 12,300 level is going to be a crucial guide for price action, with an hourly close above there pointing towards a continuation of this recent rally. Meanwhile, with the price below that level there is a good chance we could see the index come off further from here.

DAX price chart

DAX price chart

DAX price chart

Dow moving back into Fibonacci support

The Dow Jones has been turning lower once more following the rebound seen earlier in the week. The break through 21,914 resistance last week provides us with a bullish outlook for the index, tallying up with the long-term uptrend.

As such, this market looks like it is at a good buying point, with long particularly attractive at the 76.4% level (21,739). A break below 21,646 would be required to negate the current bullish outlook.

Dow price chart

Dow price chart

Dow price 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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