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Levels to watch: FTSE, DAX and Dow

Markets looking bearish following a strong sell off late into yesterday’s session. With the Federal Reserve out the way, the fundamental driver remains Greek-focused which is not a good thing for equities.

US trader
Source: Bloomberg

FTSE breaks below 6672 and seeks to retest

Price has marginally run past the key 6672 level overnight, posting a five-month low for the index. Unfortunately we have not seen a close below that level, with the price closing on 6672 at the end of the session. However, the intraday charts show that price is retesting that previous support level as new found resistance, and as such I am bearish as long as price is below 6672.

The retest provides me a good opportunity to enter short into the market, with a tight stop loss just above 6691. That would be based upon the 6672 resistance holding and the Greek story continuing to drag on fundamental sentiment.

FTSE 100 chart

DAX returns to support zone for the third time

Another strong selloff yesterday negated the hammer formation from Tuesday which saw a bounce higher out of the support triangle for DAX. This triangle is coming back into play today as we push back into the region.

Ultimately I do expect to see a move lower today to bring us into the triangle and then will be watching for a likely bounce later into the session. 

DAX chart

Dow bounces higher from support yet spinning top spells trouble

The bounce higher from 17,686 on Tuesday provided us with a strong bullish engulfing pattern. However, yesterday’s spinning top candle is a little bit of a worry, given that it also established a new lower high. As such, it looks a lot like we could see another move lower today, to establish yesterday’s peak as the new lower high which would continue the downtrend.

Ultimately, we would need a move above 18,112 to point towards a more bullish phase coming back into play. Until then, it is likely that we will soon return to 17,686 for yet another test of major support. Be aware that we could move back towards the 18,055 region to sell off from trendline resistance and this would be sparked by an intraday move above 18,000. However, the bearish outlook for the Dow Jones will remain unless we move above 18,112.

Dow Jones chart

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