CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved.

Levels to watch: FTSE, DAX and Dow

Divergent fortunes for European and US markets look set to continue apace, with the Dow pushing higher amid a weakening of the FTSE and DAX.

IG Analyst

Publication date : 2017-07-28T09:18:26+0100

Trading floor figure

Source: Bloomberg

FTSE continues to drift lower

The FTSE is declining once more this morning, following a flatlining low and failure to create a new high. That is worrying, and a break back below 7356 would point towards significant losses.

However, for now, it is worthwhile watching for a potential period of consolidation, with the 76.4% retracement below at 7387. Given the somewhat sideways nature of recent price action, the stochastic could become more useful, with a break back above the 20 mark providing a bullish short-term signal.

FTSE chart

FTSE chart

FTSE chart

DAX turns lower following wedge

The DAX rolled over as expected yesterday. However, this sell-off has proven to have legs, with the price breaking a new low below 12,140. That is a worry for the medium-term picture, as it largely negates the respect shown to the 76.4% retracement at 12,180.

For a wider bearish view to come into play we would need to break below the 11,942 mark. However, for now, a short-term downtrend is clearly in play, with a break up above 12,344 needed to point towards a rally back into the previous high of 12,952.

DAX chart

DAX chart

DAX chart

Dow expected to continue its rise

The Dow Jones has continued its ascent overnight, with any pullbacks being bought into. We are seemingly moving higher from the bottom of its recent channel, and as such, a bullish outlook remains valid.

A break back below 21,689 would be required to negate this bullish outlook. That figure would shift upwards to 21,740 should we break to a new high above 21,805.

Dow Jones chart

Dow Jones chart

Dow Jones chart

This information has been prepared by IG, a trading name of IG Australia Pty 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.

Find articles by writer

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You do not own or have any interest in the underlying asset. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. Please consider the Margin Trading Product Disclosure Statement (PDS), Risk Disclosure Notice and Target Market Determination before entering into any CFD transaction with us.

The value of shares, ETFs and ETCs bought through an IG share trading account can fall as well as rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results.

Please ensure you fully understand the risks and take care to manage your exposure.

The information on this website is prepared without considering your objectives, financial situation or needs. Consequently, you should consider the information in light of your objectives, financial situation and needs.

This website is operated by IG Australia Pty Ltd. IG Australia Pty Ltd is located on Level 32, Queen & Collins, 376-390 Collins Street, Melbourne, VIC 3000. ABN 93 096 585 410, Australian Financial Services Licence No. 515106. Derivatives Issuer Licence in New Zealand FSP No. 684191, NZBN 9429047618251.

The information on this site is not directed at residents of the United States or any particular country outside Australia or New Zealand and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.