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Levels to watch: FTSE, DAX and Dow

The FTSE breaks below trendline support, yet with the Dow and DAX holding up above key support, this weakness could be fleeting.

IG Analyst

Publication date : 2017-05-31T08:56:03+0100

The City of London

Source: Bloomberg

FTSE rally comes under pressure

The FTSE sold off sharply at the beginning of the week, unwinding some of the recent gains and breaking the price below an ascending trendline. Crucially, we have seen the 50-day simple moving average (SMA) hold up once more as support.

We would need an hourly close below 7475 to really start to bring a more bearish view into play. Until then, it seems as though the ascent could simply be slowing somewhat. Watch out for an hourly close above 7556 to confirm a continuation of the recent uptrend.

FTSE chart

FTSE chart

FTSE chart

DAX continues to trade within triangle formation

The DAX remains within a symmetrical triangle formation, with the price rallying into the descending trendline, which has been respected on the top end of the pattern.

With that in mind, keep an eye on a breakout for clues of where we are heading next. An hourly close above 12,650 would point towards a move back towards the 12,800 region. Conversely, an hourly close below 12,529 would point towards a potential move back into the crucial 12,400 support level.

DAX chart

DAX chart

DAX chart

Dow grinding lower after trendline bounce

The Dow Jones is moving gradually lower this morning, following a bounce from an inside trendline yesterday. With that in mind, there is a good chance we could see this market turn higher once more before long.

As such, watch out for how the Dow responds to the trendline support if we continue to move lower, with the ability or inability to break through it, key to determining whether this weakness is over or expected to persist.

Dow Jones chart

Dow Jones chart

Dow Jones chart

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