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Levels to watch: FTSE 100, DAX and Dow

A dovish appearance from the Fed chair Powell helped boost stock markets, with the US understandably feeling the full force of that shift. Nevertheless, this is helping build hope that we could see the end of recent selling pressure, both in Europe and the US.

IG Analyst

Publication date : 2018-11-29T10:43:31+0000

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FTSE 100 rallies through key resistance level

A dovish appearance from Federal Reserve (Fed) chair Jerome Powell yesterday provided a welcome boost for stock markets, with the FTSE 100 rallying back up into the 7059 mark. The ability to break convincingly above that level provides us with a more bullish outlook for the index.

With the price looking primed for another move higher, short-term weakness is likely to be a retracement of the rally from 6911. Thus, further upside is expected before long, with a drop below 6911 required to bring a more bearish outlook.

FTSE 100 chart

FTSE 100 chart

FTSE 100 chart

DAX rallies into SMA resistance

The DAX managed to rally through trendline resistance once again, finding the 200-day simple moving average (SMA) and 61.8% Fibonacci level one step too far for now.

With the index easing back somewhat, the ability to remain above 11,274 will be crucial. A drop below that level would point towards a retracement of the rally from 11,090 coming into play. For another leg higher, we need to see this confluence of resistance overcome.

DAX chart

DAX chart

DAX chart

Dow showing signs of potential wider recovery

The Fed has helped the Dow Jones more than most, with the index posting a blockbuster session yesterday. A break through the 25,511 mark would go some way to helping build a story of a wider recovery.

However, given the size of the recent rally, it wouldn't be a surprise to see the index ease back a little. Thus look for a break through the overnight highs to point towards another leg higher, with a break through 25,511 providing greater confidence that this move will last.

Dow Jones chart

Dow Jones chart

Dow Jones chart

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