Levels to watch: FTSE, DAX and Dow

Tuesday has started off on a weak note, with indices continuing to give back gains from last week. At present, the decline is modest, but nervousness persists ahead of the Federal Reserve decision tomorrow.

Source: Bloomberg

FTSE 100 could see 6380

Yesterday’s high water mark came around 6450, with the index gradually moving lower following this. The 6380 level is key to watch, having acted as support on 22 October and before that as resistance on 21 October.

A break through here would target 6300 itself, and beyond that 6250. As things stand the 100-day SMA at 6439 is the area to watch for any upside breakout, but it looks increasingly likely that bullish momentum is on the wane.

Any extended period below 6400 is likely to result in extended declines.

DAX could move back to 10,600

While it is not wise to stand in the way of the European Central Bank, we have seen the DAX give up the 10,800 level, with the rally stalling yesterday.

For daily chart watchers, the October uptrend which began back down at 9400 is still in place, so even a move back to 10,400 would not suggest this bounce has come to an end.

However, those looking at the short-term will note that the index is pushing through the 50-hour SMA (10,782), which would raise the possibility of a move back to 10,600 and then on to 10,534. 

Dow eyes 17,925

A sequence of lower highs appears to be developing here, as the index fails to push on from 17,700.

A continuation of the downward move takes us in the direction of 17,500, and then to the 200-hour SMA at 17,294. On the daily chart, the 200-day SMA at 17,578 is just keeping the price up, but a close below here would suggest that more losses are on their way.

A breakout from 17,700 still leaves the index with a chance to head back towards 17,925. 

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