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Levels to watch: FTSE, DAX and Dow

DAX strength could point towards a resurgence in play, yet with key resistance levels up ahead for FTSE 100 and Dow, a wide-ranging bullish reversal could take longer to play out.

IG Analyst

Publication date : 2017-08-23T09:15:41+0100

Market data

Source: Bloomberg

FTSE 100 turns into trendline support

The FTSE 100 has been moving lower overnight, following a rally into the 7400 mark yesterday. Crucially, we are seeing lower highs and flatlining lows on the wider view, thus forming a descending triangle. With that in mind, another move lower from here does seem a strong possibility.

However, there is a clear trendline support to contend with first, which is currently around the same level as the 50-period (4-hour) simple moving average (SMA). A break above 7400, or below the 7360 mark will give us a better idea of which direction this market wants to move.

FTSE 100 chart

FTSE 100 chart

FTSE 100 chart

DAX moving back into crucial resistance zone

The DAX is pushing higher following a short-term pullback from trendline resistance. This trendline is going to remain key for the day ahead, with the ability to break through it, and in particular the 12,300 mark, pointing towards a wider resurgence for the pair.

As such, watch these levels for a potential bullish breakout, or short-term reversal.

DAX chart

DAX chart

DAX chart

Dow continues to move higher

The Dow Jones has been gaining ground amid a potential retracement of the sell-off seen last week. The question here is whether we are seeing a retracement or a bullish reversal.

For now we have seen a move into the 61.8%, which could extend to the 76.4% level (21,971) should we see a break back through 21,914. Ultimately, while there is a clear downtrend in play over recent weeks, the fact that we have seen the Dow rallying from the 76.4% retracement points towards a possible resurgence from here.

Ultimately, a break up above the 76.4% retracement could be a sign that this period of weakness is over. Until then, the picture is fairly balanced and thus it makes sense to keep an eye out for potential bearish reversal signals from these levels.

Dow Jones chart

Dow Jones chart

Dow Jones chart

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