Levels to watch: FTSE 100, DAX and Dow

Both US and European markets are looking primed for a potential bearish reversal, with wedge breakdowns coming off the back of recent rallies into key resistance levels.

FTSE 100 turns lower after hitting 76.4% retracement

The FTSE 100 rallied into the 76.4% retracement this week, with the index reversing lower within the course of yesterdays session. The break below 7064 at the end of February raised the possibility that the rally we are currently seeing could be a retracement before we turn lower once more.

A break through 7210 and ultimately 7262 would negate that possibility. However, with the price having broken below the 7158 support level, there is a chance we will see this rally fall short for a more bearish outlook to come back into play. As such, unless we break through the 7210 level, any short-term upside has the potential to be the precursor to another bearish turn in the FTSE 100.

FTSE 100

FTSE 100

DAX falls into key support level

The DAX has been trading lower throughout the second half of the week, with the price falling through trendline support to challenge the 11,525 support level.

While that level is not as important as 11,401 in providing a wider bearish outlook, a fall below here would certainly add to the notion that we could be set for a bearish phase. With the index failing to break throughout the notable 11,692 resistance level, watch out for a burgeoning bearish picture unless we manage to break up through that long-term swing high.

DAX chart

DAX chart

Dow continues to turn lower following wedge breakdown

The Dow Jones has broken back towards the downside this week, with the fall out of a rising wedge formation coming into play after a rally into the key 26,284 resistance level.

This could be the beginning of a wider period of downside, with the break below 25,763 providing a bearish outlook for the index. Given the continuation of that trend overnight, there is a good chance that we will see further downside come into play. A rally above 25,895 would be required to negate that bearish short-term outlook.

Dow Jones chart

Dow Jones chart


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