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Levels to watch: FTSE 100, DAX and Dow

The indices are starting to reverse upwards, with key levels having been broken. However, there is still some way before we can say that this is the beginning of a wider recovery or not.

IG Analyst

Publication date : 2018-11-01T10:00:07+0000

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FTSE 100 breaks through key resistance level

The FTSE 100 managed to break through the 7115 swing high yesterday, providing another piece to the jigsaw for this bullish resurgence.

This provides a strong signal that we are set for further upside. With that in mind, watch out for further upside, where any losses look like a buying opportunity as long as we do not see the price drop below Friday's low of 6845.

FTSE 100 chart

FTSE 100 chart

FTSE 100 chart

DAX rebound could come under pressure

The DAX has been gaining ground, with the price reaching trendline resistance which originally formed the head and shoulders neckline on the weekly timeframe.

This also coincides with the 200-week simple moving average (SMA). Given the current rising wedge moving into that resistance level, there is a strong chance we could see this market turn lower before long. Watch out for the 61.8% Fibonacci level as the next point of resistance. Ultimately, we would need a break through 11,851 to provide a more convincing bullish picture for the long term.

DAX chart

DAX chart

DAX chart

Dow continues to rise after upside break

The Dow Jones is moving higher after the bullish break through 25,036 yesterday. That breaks the pattern of lower highs and points towards a potential bullish shift in sentiment, for the short term at least.

Much like the FTSE 100 and DAX, the question remains over whether this is going to be a short-term rebound and retracement, or else the beginning of a wider recovery. We would need to see a rally through 25,862 to provide a signal that this could be the end of the wider downturn. Until then look out for further short-term gains as we move towards the next hurdle at 25,451 (76.4% retracement).

Dow chart

Dow chart

Dow chart

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