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Levels to watch: FTSE 100, DAX and Dow

Yesterday’s weakness appears to be fading today, with European markets gaining ground in particular. Could this be the beginning of the next move higher?

IG Analyst

Publication date : 2017-09-05T09:38:02+0100

Trading floor

Source: Bloomberg

FTSE 100 regaining lost ground

The FTSE 100 has been gradually making up the lost ground following the gap lower at the open yesterday. Given the break through 7446 last week, it seems likely that we will see further gains before long. However, there is a good chance that, given the strong move higher last week, we could see the index come off further before moving back into the bullish mindset.

With that in mind, an hourly close above 7460 would provide a renewed bullish outlook. Until then, short-term losses remain a strong possibility due to the wide swings seen in recent weeks.

FTSE 100

FTSE 100 chart

FTSE 100

DAX rallying back into resistance zone

The DAX is pushing higher once more this morning, as the index recovers from yesterday’s sell-off. Crucially, we have a clear bearish pattern over the longer term, with lower highs set throughout August. Given last week’s rally and turn lower from the 76.4% retracement, it will be key to see whether the price breaks through 12,193 or not. Inability to do so would highlight the potential for the market to weaken heavily once more.

A break through 12,193 would subsequently look towards trendline resistance as the next hurdle. We would need to see a break through 12,276 to negate the wider bearish trend.

DAX chart

DAX chart

DAX chart

Dow holding out above key support level

The Dow Jones is marginally gaining ground from the 21,914 support level this morning, following the breakout through this level last week. That 21,914 area is going to be crucial today, with an hourly close below that level pointing towards a likely continuation of the weakness we have seen yesterday.

Whether that move comes to fruition or not, last week’s bullish breakout means that we are likely to see a short-term retracement before we move higher once more.

Dow price chart

Dow chart

Dow price chart

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