Levels to watch: FTSE 100, DAX and Dow

European and US markets are showing signs of a potential pullback. However, with uptrends in play, there is a chance such a move will be short-term.

FTSE 100 rally starts to falter

The FTSE 100 rally seen throughout the past two days is starting to come under pressure, with the creation of a bearish engulfing pattern pointing towards a potential turn downwards from here.

Coming off the back of a trendline breakdown and drop below 7179, this recent bounce looks like a 76.4% retracement before we turn lower once more. Unless we see a break through the 7262 peak from Friday, this market looks at risk of another move to the downside. This far we have seen the 50% Fibonacci level respected, yet this could become a deeper retracement unless we do break that 7262 level.

FTSE 100 chart

FTSE 100 chart

DAX turning lower from trendline resistance

The DAX is also breaking lower, following on from a period of upside over the course of the past 24 hours.

There is a good chance that this could be the beginning of a short-term retracement of the rally from 11,242. Keep an eye out for short-term downside, with a drop below 11,242 required to bring about a wider bearish picture.

DAX chart

DAX chart

Dow falling back from key resistance

The Dow Jones is weakening off the back of a rally into a three-month high this morning.

That fleeting move through the 26,071 level overnight has still seen the price respect a level that is crucial to the wider story for this index. While the short-term trend remains bullish, this certainly represents a key level that could see a wider pullback come into play. Keep an eye out for a break below 25,790 to signal a wider bearish phase coming into play, whereas a rally back up through 26,071 would point towards a likely continuation of this recent uptrend. Should the index break through the 26,072 level, the next resistance level of note is found at the November peak of 26,278.

Dow Jones chart

Dow Jones chart


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