CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% of retail investor accounts lose money when trading CFDs with this provider.You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

Levels to watch: FTSE 100, DAX and S&P 500

After a resolutely bullish end to last week, indices look in good shape, although the downtrends from the last few months of 2018 remain in place.

FTSE 100 drops sharply in early trading

Since 26 December, the FTSE 100 has gained solidly - up almost 5% from that month's lows. Having leapt higher on Friday, it is not surprising to see some early weakness this morning.

However, the trend from the lows of December is still up, and a pullback towards 6750 may see fresh buyers emerge. The first target is 6920, with the 50-day simple moving average (SMA) at 6914 also worth watching given how it marked significant resistance at the beginning of December. A breakout above these would open the way to trendline resistance from the August highs, around 7060, and horizontal resistance at 7127. A move back below 6680 is needed to reverse the short-term bullish picture.

DAX rallies, but for how long?

Despite the 600-point gain from the lows, the longer-term downtrend for the DAX remains in place. A new lower low was created at the end of December, so for the moment any bounce may be short-lived.

Nonetheless, for the time being, the buyers are in control and a pullback from the Friday highs remains a possible buying opportunity. Upside targets lie at 11,000, which marked support in October and November and then resistance in early December, and then the 50-day SMA at 11,073, which saw significant resistance in early December. A move back below 10,400 would suggest that the downward move has resumed.

S&P 500 tops 2520

US markets, including the S&P 500, recovered from the mid-week sell-off on Friday, helped along by comments from the Federal Reserve (Fed) chair Jerome Powell.

The index has managed to clear the 2520 highs of last week, and now targets the 2610 area of support that held in October and November before being broken in mid-December. The 50-day SMA at 2639 also comes into the frame at this point. Above here, trendline resistance from the all-time high would be seen around 2700. Trendline support from the December low comes into play around 2480.

This information has been prepared by IG, a trading name of IG Markets 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. See full non-independent research disclaimer and quarterly summary.

See an opportunity to trade?

Go long or short on more than 17,000 markets with IG.

Trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Monday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.