Levels to watch: FTSE 100, DAX and Dow

European and US markets are on the rise following yesterday’s sharp sell-off. However, with the downtrend still in play, this rebound could simply provide a shorting opportunity.

FTSE 100 heading lower amid consolidation phase

The FTSE 100 is weakening once more after a period of stability that has taken hold in the early hours of the morning.

The fall below the 6788 support paved the way for a further downside that has taken shape throughout yesterday. This sell-off is likely to persist, with a rally back up through the 6853 level required to negate the bearish outlook. Watch out for a closed candle below the 6717 level to signal a likely next leg lower.

FTSE 100 chart

FTSE 100 chart

DAX regaining ground after recent decline

The DAX is rising into a crucial resistance level this morning, with the index consolidating after a sharp decline yesterday.

There is a good chance that we will provide some form of a deeper retracement if we break above the 10,779 swing high. However, such a move would be perceived as a precursor to further downside unless we break through the 10,918 mark. As such, watch for whether we break the 10,779 level, with a rise towards the 61.8% and 76.4% Fibonacci retracement zone looking likely if that level is broken. Until then, there is a chance of us turning lower once again amid this recent consolidation phase.

DAX chart

DAX chart

Dow Jones rebound unlikely to last

The Dow Jones is similarly regaining ground after yesterday’s declines. This does not necessarily mean that we are going to see the upside persist, with a rally into the 61.8% region looking likely in an ABC retracement style.

A break through the 24,088 mark would largely negate that bearish short-term view, yet until that happens, this current period of upside is likely to provide a shorting opportunity.

Dow Jones chart

Dow Jones chart


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