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Levels to watch: FTSE 100, DAX and Dow

Global indices have been drifting lower after yesterday’s hawkish Fed meeting. However, with recent trends remaining intact, this could be a good time to look for a bounce in European and US markets.

anonymous

Publication date : 2018-06-14T09:29:42+0100

Wall Street

Source: Bloomberg

FTSE 100 falls back into trendline support

The FTSE 100 has dropped into trendline support overnight, following a hawkish meeting from the Federal Open Market Committee (FOMC). Today sees the emphasis shift onto the European Central Bank (ECB), where we could see a similarly hawkish shift towards ending quantitative easing (QE).

For now, the FTSE 100 remains within a trend of higher lows and flatlining highs. As such, a bullish outlook is in play following the fall into a deep retracement. The current candle is highlighting the respect of that trendline which dates back to November 2016. A bullish view is in play for a move back into the 7761-7772 region. A break below 7638 would negate this.

FTSE 100 chart

FTSE 100 chart

FTSE 100 chart

DAX retracement likely to be short-lived

The DAX has similarly seen downside overnight, bringing the index close to yesterday’s 12,779 low.

A break below that level would simply look like a retracement of the 12,611-12,956 rally, at which point we will utilize the Fibonacci levels for a bullish entry. Until then, the ability to remain above 12,779 should signal whether we are set for a push higher or drift lower in the short term.

DAX chart

DAX chart

DAX chart

Dow drops below Fibonacci support

The Dow Jones has managed to break lower following a slow in the recent uptrend, as signified by the break through trendline support.

The price has since broken below the 76.4% retracement, highlighting the potential for a further breakdown. Nevertheless, there is still a strong chance that we will see this uptrend come back on track with a rally from here. A break below 25,075 would provide that bearish signal, and until that happens a rebound seems likely.

Dow Jones chart

Dow Jones chart

Dow Jones chart

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This information has been prepared by IG, a trading name of IG Markets Limited 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. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.

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