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Levels to watch: FTSE, DAX and Dow

Indices pull back, yet this could be a short-term phenomenon. Otherwise things could get ugly once more.

CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.
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Source: Bloomberg

FTSE falling towards key support level

The FTSE is pulling back towards an ascending trendline and 6123 support zone which represents the lower range of the rising wedge that we have seen respected over the past two weeks. Given past experience, it seems likely that this selloff will find some sort of bounce above 6123, with the 50-period SMA also providing a reliable support level (currently 6131).

Ultimately any bearish outlook would require a move below 6010, and for now we are some way away from that. Thus I am bullish as long as the price remains above 6123, with a push back towards 6220 seeming likely today.

DAX selloff likely to reverse higher as day goes on

The pullback seen in the DAX so far this morning has brought the price to the confluence support level provided by the 50- and 100-period SMA (four-hour). Neither of these moving averages have particularly been reliable support or resistance levels recently, so I wouldn’t put too much pressure on them to hold. However, we have seen a clear trend of higher lows, and the price is currently within relatively close proximity to the 10,113 support level, which if broken would begin to turn the picture relatively bearish.

Thus for this trend we have seen over the past three weeks is to hold, then we would need to see a bounce in the near future. The fact that we have sold off already despite only seeing a minimal bounce is a worry, yet until the price moves below 10,113 I remain bullish and expect to see the price recover as the session goes on.

Rangebound Dow appears to be turning lower

The Dow Jones has been more rangebound and directionless than its European counterparts recently. However, just like the DAX, the latest move higher appears to be in the process of being cut short, with a move lower in the early morning trade seeming likely.

This market has less direction in play and thus I have no particular medium-term bias. However, I do expect us to see a move down to 16,162 support in the near future, and the direction will be sought by a move either below 16,162 or above 16,456.

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CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.