CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Levels to watch: FTSE, DAX and Dow

Consolidation seems to be the name of the game, with the FTSE and Dow both trading largely sideways, with the DAX proving the main loser so far.

IG Analyst

Publication date : 2017-08-03T09:23:30+0100

German trader

Source: Bloomberg

FTSE consolidates within wedge

The FTSE has been consolidating since yesterday’s trendline sell-off. The price action seen over the past fortnight has formed a bullish falling wedge pattern, which is expected to continue apace with another leg lower from here.

A break back up through 7443 would certainly provide a warning sign that we are seeing a bullish wedge breakout. Until then, the recent creation of lower highs and lower lows is expected to persist.

FTSE chart

FTSE chart

FTSE chart

DAX sell-off continues apace

The DAX has been selling off since a deep retracement took us back to the 12,305 mark. Crucially, we did not see a break up through the 12,344 level, meaning that the trend of lower highs and lower lows remain in place.

As such, the recent downtrend remains intact, with further downside looking likely for now. A break back above 12,305 would be required to negate this view.

DAX chart

DAX chart

DAX chart

Awaiting Dow triangle breakout

The Dow Jones has been consolidating over the past three days, with the price forming a symmetrical triangle pattern. We are seeing a bearish break through trendline support currently, yet the key here is the potential to post an hourly close above 22,034 or below 21,965.

That will truly provide us with a directional bias. Until then, the bullish view dictated by recent gains remains dominant.

Dow Jones chart

Dow Jones chart

Dow Jones chart

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