Levels to watch: FTSE, DAX and Dow

Indices tumble heavily, sparked by the overnight Chinese rout. Could this spell the beginning to a tough 2016 for stock markets?

Data chart
Source: Bloomberg

FTSE turns bearish once more
The FTSE rallied significantly in the second-half of December, yet until price broke through 6447, the bearish bias always seemed likely to return before long. Today marks that day, with price having clearly turned over, passing through the key 6203 support level.

Given that this selloff seems extended on the momentum indicators (stochastic and MACD), it seems prudent to await the creation of another period of consolidation to take any fresh positions. Support levels of note are 6123, 6070 and 6000, with resistance levels at 6203, 6270 and 6326. 

DAX loses traction and heads lower
A similar story for the DAX, with the longer-term charts looking somewhat bearish. Thus the break through 10,630 support simply provides us with the resumption of an overall bearish outlook.

Again, the market does look extended in terms of today’s selling and thus a period of consolidation would provide a greater degree of accuracy in terms of new positions. However, the beginning of the week seems likely to be a bearish one and thus any rally would be seen as temporary. Support levels of note are 10,398, 10,188 and 10,121, with resistance levels at 10,486, 10,524 and 10,630.

Dow drops like a stone
The Dow Jones appears to be bearing the biggest brunt of this selloff, with the index falling over 280 points this morning alone. The selling we are currently seeing seems likely to continue for the time being, with the first notable support levels coming into play around 17,140, 17,097 and trendline support (currently 17,082).

With price having typically spiked higher from this support region in the past, the ability to do so again – or break lower – will subsequently dictate the state of play in the coming days.

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