Levels to watch: FTSE, DAX and Dow

DAX pullback looks unlikely to last

The DAX is pulling back this morning, following on from yesterday’s sharp rally for the index. Crucially with yesterday’s push into a new high, the uptrend still clearly remains intact.

With that in mind, the expectation is that we will push higher once more in the near future. As long as price remains above the 12,432 level, a bullish view remains in play, with a deeper retracement presenting a more advantageous area for entry.

To that end, long positions are preferred with the 61.8%-76.4% Fibonacci zone (1.2469-1.2455) particularly interesting for bullish entries. 

Dow continues to drift lower, for now

The Dow Jones has been trying to break below the crucial 20,903 level this morning, in a signal that we could be set to continue the weakness of the past week. Crucially, despite this short-term frailty, this recent descending channel looks like a retracement of the gains seen at the beginning of last week. As such, a break higher from this channel looks likely before long.

The signal that this bullish view is coming back into play would be a break through the most recent swing high. For now that is 20,959. As such, while an hourly close below 20,903 would point towards a likely next leg lower, the expectation is that this downtrend will soon be negated. Watch for a break through 20,959 to signal a resumption of the bull trend.