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Levels to watch: FTSE, DAX and Dow

Indices have been sent on a bearish spiral despite seemingly dovish FOMC comments.

The Federal Reserve
Source: Bloomberg

FTSE’s close below 6429 a major bearish signal

The FTSE has broken and closed below the crucial 6429 support level, setting us on yet another leg lower. The crucial thing to follow is the creation of new steps lower, and until we see the creation of a new intraday high or higher low I expect us to continue trading lower.

Any upside is likely to find resistance at 6384, 6410 and certainly 6429. Given that the breakout is so recent, the creation of a higher high, above 6410 would be forgiven as long as the price then finds new resistance at the 6429 level. Thus I am bearish as long as the price remains below 6429. The next major level of support to watch out for on the downside comes in at 6295.

FTSE 100 chart

DAX breaks lower from channel

The DAX has managed to break lower from the descending channel formation that we have been watching earlier in the week. This has provided a stepped price action on the hourly chart, and thus the key here is to look for resistance at the previous area of support, on this occasion 10,660 which also coincides with the July lows. Thus I am bearish and see any move higher as a selling opportunity as long as the price remains below 10,696.

DAX chart

Dow break below 17,339 a major bearish signal

The break lower for the Dow Jones yesterday took out not only the descending trendline, but more importantly the 17,339 level. This means that we have now seen a lower high and lower low, alongside the creation of a double-top. Not good! The double-top formation provides a projected target of 17,100, yet in the short term the 7 August low of 17,278 is the short-term challenge, where a close below this level would point to further losses. A move back to 17,339 should provide resistance should we see a bounce higher and this bearish view will only be negated with a move back above 17,353.

Dow Jones chart

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