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Levels to watch: FTSE 100, DAX and Dow

US indices are expected to underperform once again with the Dow looking bearish. Meanwhile, the grind higher continues for the FTSE 100 and DAX.

IG Analyst

Publication date : 2018-05-17T09:23:49+0100

DAX

Source: Bloomberg

FTSE 100 pullback bringing another turn higher

The FTSE 100 drifted into trendline support overnight, with the recent uptrend remaining on track amid a turn higher in recent price action.

The price is clearly in a low volatility phase, with the Bollinger band squeezing to highlight such a move. This current turn higher points towards a move back into the near-term resistance level of 7752, above which we have the all-time high of 7796. A break below 7685 would negate this bullish outlook.

FTSE 100 price chart

FTSE 100 price chart

FTSE 100 price chart

DAX finding trendline support amid grind higher

The DAX is gradually gaining ground, following on from a fall back into trendline support once more this morning.

The wider trend is clearly bullish and, as long as we do not see the price fall below the 12,852 swing low, it is likely any short-term weakness is there to be bought into.

DAX price chart

DAX price chart

DAX price chart

Dow fightback falling short after wedge breakdown

The Dow Jones rebound is faltering once again this morning, with the index heading back towards Tuesday’s low of 24,628. Rising US treasury yields, coupled with a rising dollar have ensured that we are seeing underperformance in US markets, which looks likely to continue.

The ability to break below that 24,628 level would be key in solidifying the short-term bearish outlook, while a rally through 24,801 would go a long way to bringing a more bullish outlook. The wider picture is a bullish one following the rally through 24,860. However, there is a strong chance we could see the index turn lower as a retracement of the 23,531-24,994 rally.

Dow Jones price chart

Dow Jones price chart

Dow Jones price chart

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