FTSE 100, DAX and Dow gains could be short-lived
FTSE 100, DAX and Dow regain ground, yet it could be a precursor to further downside.
FTSE 100 rises back into Fibonacci resistance
The FTSE 100 has managed to push higher once again this morning, with the index rising through trendline resistance after overnight losses. The triangle formation seen over the course of April could break in a bullish manner if the index rises through 5849.
However, with the 76.4% Fibonacci level up ahead, it is worthwhile watching this area of resistance as a potential turning point for the FTSE. With the stochastic moving back into overbought territory, there is a chance we could see price start to consolidate or roll over around these levels. This bearish outlook is negated with a break through 5849.
DAX rises within consolidation/topping phase
The DAX failed to break below the 10,152 support level on Tuesday, with the index maintaining the price action within its consolidation or topping zone. The breakout from this range should ultimately guide us in the direction of the next move.
However, with US markets providing a more bearish outlook, a follow up on those moves would likely drag European markets with it. In that scenario, the current rally looks like it could be a short-term retracement before we turn lower once more. The price is currently respecting the 50% retracement level, yet we could move further into a 61.8% or 76.4% pullback. In any case, a bearish outlook is in play unless we see a rally through 10,773.
Dow Jones rally could be doomed for failure
The Dow Jones is regaining ground following a strong downward move in the early part of the week. That breakdown took us below the 23,089 support level to break the previous uptrend.
With that in mind, there is a good chance we are currently retracing before the index rolls over once again. Thus, keep an eye out for Fibonacci resistance to potentially come into play from here. As such, while we could see further upside for the short term, that move is likely to roll over rather than break through the 24,447 peak. Such an upside breakout would obviously negate this current bearish outlook.
This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Take a position on indices
Deal on the world’s major stock indices today.
- 1-point spread on the FTSE 100 and Germany 40
- The only provider to offer 24-hour pricing
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only
