Levels to watch: FTSE 100, DAX and Dow

European and US indices are moving higher after their recent pullback. However, while these indices are gaining ground, there is still a significant risk of a bearish turn in the near future.

FTSE 100 rallies into Fibonacci resistance

The FTSE 100 has managed to rally back towards the crucial 7196 resistance level over the past two days. The ability to break through that 7196 level is going to be crucial in determining where we go from here.

We are currently seeing the index respect the 76.4% retracement level, and thus traders should be aware that we could start seeing a bearish shift unless we do manage to break through 7196.

FTSE 100 chart

FTSE 100 chart

DAX rebounds unlikely to last

The DAX has been turning higher since Friday’s low, with the index recovering a large chunk of last week’s losses.

However, with the index having broken below the key 11,047 and 11,004 swing lows, this rally is unlikely to last. Instead, this rally looks like a good shorting opportunity, with shorts preferred within the 11,187-11,264 zone (61.8% and 76.4% retracement). A break through the 11,389 level would negate this bearish outlook.

DAX chart

DAX chart

Dow regaining ground after recent pullback

The Dow Jones is slowly gaining ground following a period of weakness that took the index close to the crucial 24,835 swing low.

While we did not break below that level to bring a more bearish outlook, the gradual nature of this ascent does raise questions over whether the index will have enough impetus to break up through the 25,439 high. As such, watch for a break below the 25,002 level to bring a more bearish view, with the gradual move higher likely to continue until unless we see that bearish shift. A rally through 25,439 would be needed to bring greater confidence that this uptrend is set to continue.

Dow Jones chart

Dow Jones chart


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