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Levels to watch: FTSE, DAX and Dow

Recent weakness for stocks appears to be waning, with the FTSE and Dow in particular showing signs of strength.

IG Analyst

Publication date : 2017-01-05T09:15:29+0000

Data board

Source: Bloomberg

FTSE 100 hits another Fibonacci on its grind higher

The FTSE has been pushing higher from the 76.4% (7171) Fibonacci retracement this week, with price pulling back once more to hit another 76.4% (7174) this morning. The fact we did not break below 7160 points toward a likely move back into the previous highs of 7205.

As such, a bullish outlook is in place, with a move back above 7200 and 7205 likely to be around the corner. A break below 7166 would serve as a warning sign that we could see some short-term weakness for the index.

FTSE 100 price chart

FTSE 100 price chart

FTSE 100 price chart

DAX attempting to regain ground

The DAX has seen sharp losses this morning, with the current candle showing an attempt to regain some of that ground. Until we see a break back above 11,597, the downtrend remains intact.

That said, the resolution to this current pattern is expected to be bullish with a move back towards 11,646 likely rather than a break below 11,401. This would be required to negate the wider bullish trend.

DAX price chart

DAX price chart

DAX price chart

Dow pullback unlikely to last

The Dow Jones has managed to break through 19,938 resistance overnight, bringing a bullish outlook to proceedings. With price forming an ascending channel this morning, we are likely to resolve to the upside.

As such, a bullish signal comes from either a break through 19,934 or else a pullback to the 19,891-19,903 zone. A move back below 19,872 would negate this short-term view.

Dow Jones price chart

Dow Jones price chart

Dow Jones price chart

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