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Levels to watch: FTSE, DAX and Dow

Both European and US indices continue to push higher, with weakening European FX helping the FTSE and the DAX.

IG Analyst

Publication date : 2017-08-07T09:13:30+0100

Market data

Source: Bloomberg

FTSE breaks out of recent downturn

The FTSE managed to break through the crucial 7516 resistance level on Friday, which adds further credence to the bullish shift instigated by the push through 7487.

This morning has seen the price find support on that same 7516 level, which could mark the low of this consolidation. Ultimately, we would need to see a break below 7457 to negate the bullish view that is now in play, with 7600 the next major resistance point of note.

FTSE chart

FTSE chart

FTSE chart

DAX appears to be bottoming out

The DAX has broken through the crucial 12,306 resistance level following a protracted sell-off into the 76.4% retracement. The level marks the confirmation signal from an inverse head and shoulders formation with a sloped neckline.

With that in mind, it looks like we are set for a period of strength for the DAX, with 12,480 marking the head and shoulders target. That being said, keep an eye out for the wider downtrend in play, with a descending trendline and the 200-period (4-hour) simple moving average (SMA) providing a resistance zone to break through.

DAX chart

DAX chart

DAX chart

Dow expected to continue to push higher

The Dow Jones has drifted lower this morning, yet given the clear uptrend, there is reason to believe we will see further gains for the index.

The current pullback looks like a shallow one before the index breaks higher. As such, an hourly close above 22,137 would provide a bullish breakout signal. As long as the price remains above 22,026, then a bullish outlook remains in play.

Dow Jones chart

Dow Jones chart

Dow Jones chart

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