WIKIFX REPORT: FTSE, DAX and Dow gain ground, but bears wait in the wings

FTSE 100 rebound brings index into deep retracement

The FTSE 100 has struggled to maintain its upwards trajectory this week, with the wider gains seen throughout European and US markets bringing precious little upside for the index.

Often that could be a reflection of FX considerations, with a rally coming alongside a resurgent pound. Such a phenomenon would limit gains as those earning abroad see their revenues devalued.

However, that is not the case here, with the likes of GBP/USD and EUR/GBP actually moving against the pound which should benefit the FTSE 100.

Nevertheless, the fact that this index is struggling to replicate the gains seen elsewhere could be indicative of a lack of momentum, with price currently trading below the key 7104 swing-high.

A break through that level would signal a wider rebound coming into play for the index. Until that happens, there is a good chance we see the index turn lower to continue the trend of lower highs.

DAX continues its recovery, but bears wait in the wings

The DAX has managed to continue its upward trajectory of late, with price rising through last weeks high and return to the 100-day simple moving average (SMA).

Typically, we have seen the index reverse lower from the zone between the 100-SMA, and descending trendline. With that in mind, this current upward phase looks to represent a potential shorting opportunity for the index.

While we could see further short-term gains, that would simply provide us with a better price to look for a reversal. After-all, trendline and Fibonacci resistance still lies ahead.

As such, a bearish view holds for this index, with a push up through the 13571 swing-high required to negate that outlook.

Dow surges towards Fibonacci resistance

The Dow has been a major outperformer this week, with the index pushing sharply higher in stark contrast to the tentative gains seen in the FTSE 100.

Instead, we have seen a substantial push in a move that looks like a potential retracement of the 32666-28629 sell-off. With that in mind, it makes sense to look for a potential reversal from the 76.4% Fibonacci level at 31713.

A break through the 32666 level would weaken the bearish story, although it would ultimately take a break through 34285 to truly bring an end to this wider bearish trend.