FTSE, DAX and Dow push higher, but questions remain given bearish trend
The FTSE, DAX, and Dow rally brings major upside resistance into view, but will the bulls remain in charge?
FTSE 100 breaks through resistance, completing double bottom
The FTSE 100 has managed to break up through the 7104 resistance level this week, with yesterday's decline in GBP/USD helping to lift the index in the process.
That break does bring about expectations of a fresh push higher, with the index now left with plenty of upside space to move into as it retraces the 7577-6704 decline. As such, further upside is a distinct possibility here, with the trajectory in the pound also key given the inverse correlation between the two.
It is worthwhile noting that the wider bearish trend remains intact though, with any near-term upside looking to represent a potential short-term pullback before the bears come back into play.
A rise up through 7577 is needed to negate that view.
DAX rebounds into major resistance zone
The DAX has also been on the rise of late, with the index pushing into a fresh six-week high on Friday.
With a very clear downtrend in play over the course of the year, it is worthwhile keeping a close eye out for whether we see that trend end via a move through 13570 resistance. Such a break would bring about an end to the pattern of lower highs, signalling the potential for a wider rebound in the DAX.
However, we are not quite there yet, with the index still finding itself in a key resistance zone between the 100-day simple moving average (SMA), descending trendline, and 200-SMA levels.
Thus, there is still a good chance that we see the index turn lower from here, continuing to bearish 2022 trend. However, should we see a move through 13570, it would set us up for a potential extended period of upside.
Dow rebounds into key Fibonacci level
The Dow enjoyed an October to remember for bulls, with the index rising 14% over the course of the month. However, that move has taken price up into the 76.4% Fibonacci resistance level at 32969, with the 2022 downtrend coming into question as a result.
This week should bring plenty of volatility, with tomorrow's Federal Open Market Committee (FOMC) meeting coming ahead of Friday’s jobs report.
Nonetheless, this recent surge does look likely to fade soon enough, with central banks likely to reiterate that rates will remain elevated until inflation has been brought down.
As such, a bearish turn looks likely before long, we a rise through 34285 required to bring about a more positive wider view for the index.
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