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Levels to watch: FTSE 100, DAX and Dow

US markets are leading the way higher, with the Dow looking set for new highs. However, European markets are some way off that, with the DAX still attempting to break free from its recent downtrend.

IG Analyst

Publication date : 2018-11-08T09:24:50+0000

FTSE 100 board

Source: Bloomberg

FTSE 100 pushing higher after wedge pattern

The FTSE 100 is pushing upwards in the wake of a bullish wedge breakout seen yesterday. Upside for global markets in the wake of the US midterm elections has provided European stocks with a bullish impetus, reversing the declines seen throughout the first half of the week. This brings about a strong chance of a continuation of the rally seen in the last week of October.

Given we have pushed through the first swing high of 7141, it looks likely we will continue to gain ground, with any losses seen as a temporary move unless we break below 7026.

FTSE 100 chart

FTSE 100 chart

FTSE 100 chart

DAX back into major resistance zone

The DAX has rallied back into the 76.4% retracement level this morning, as the index seeks to form some sort of base for a recovery.

However, that Fibonacci resistance level also coincides with the 11,692 level, which is the head and shoulders breakdown level provided by the March period. As such, the ability or inability to break through that level is going to be critical in determining where we go from here. Beyond that, the index needs to break through the 11,852 level to provide a more bullish short-term view.

DAX chart

DAX chart

DAX chart

Dow rebound points towards record highs

The Dow Jones has broken from its recent downturn, with the index rallying sharply off the back of the midterm election result. Ultimately, the weakness seen throughout October looks like a retracement of the 23,992-26,952 rally.

As such, with that retracement over, it looks likely we will push up through that 26,952 mark once again in the near future. Thus, a bullish outlook is in place unless we break below 26,076, with any near-term weakness being seen as a buying opportunity.

Dow Jones chart

Dow Jones chart

Dow Jones chart

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