Levels to watch: FTSE 100, DAX and Dow
Indices stage a rebound after a bout of recent losses. However, the picture remains bearish and this looks like a potential selling opportunity.
FTSE 100 rebound looks like a temporary retracement
The FTSE 100 has managed to put together a rebound overnight, coming off the back of a notable breakdown and double top completion.
The recent rally has brought the index back into the 7268 neckline from that pattern. Whether we respect that level or not, this rebound is expected to provide us with a retracement of the decline from 7371. As such, short-term upside could occur, yet a bearish outlook remains unless we see a break through 7371.
DAX expected to continue declines of past week
The DAX has similarly seen significant downside over the course of the past week, with price creating lower highs and lows.
That points towards the current rise as being another retracement, with further downside looking likely before long. A break through 12,214 would negate that bearish outlook, while a fall below 11,824 would bring a bearish signal for the medium term rather than the short-term downtrend currently in play.
Dow rebound looks destined to falter once more
The Dow Jones is also moving higher off the back of recent declines.
Coming off the back of a breakdown below the double top neckline of 25,556, it looks like we are within a retracement period, where a break through 25,957 would be required to negate the current bearish pattern. However, it is notable that for the index to look truly bearish, we would need to see a drop below the 25,220 low from March and May.
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