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Levels to watch: FTSE, DAX and Dow

Indices reach crucial support levels, where a break below would signal a continuation of the downtrend, while another bounce is also a possibility.

Trading data board
Source: Bloomberg

FTSE drops to key support
The FTSE saw yesterday’s early rally fade back down to the crucial 5600 support level. This level represents the lows of the week, alongside the low from 20 January and the 200-month simple moving average (SMA).

As such, the reaction to 5600 will determine the state of play for the day, where a closed hourly candle below would likely spark another leg lower in which 5173 represents the next major support level.

Alternately, intraday bullish reversal signals should be watched out for as this could provide another countertrend bounce with 5713 and 5740 the next key levels of resistance.

FTSE chart

DAX trendline remains in play
The DAX has been moving higher from trendline support of late and while yesterday saw a strong sell-off in the latter part of the session, it crucially did not move back below the 8842 level. As such, until we see an hourly close below 8842, there is a good chance we could see another bounce which would highlight the recent move as a very deep retracement.

As such, intraday bullish reversal signals should be watched out for, while the ability to remain above 8842 will be key to the possibility of another bounce towards 9130. A closed hourly candle above 8922 in particular could spark another move higher. Alternately, a closed hourly candle below 8842 would point towards 8773 and lower.

DAX chart

Dow also at key support
The Dow Jones has also reached a crucial support level overnight which will determine the state of play for the day. This level of 15,802 represents Monday’s low and 200-week SMA.

As such, the ability to see a closed hourly candle below this level would signal another move lower for the index, with 15,450 and 15,253 the next major support levels. However, watch out for bullish intraday reversal signs for a potential move higher which would bring into play the 15,903 15,957 and 16,000 resistance levels. 

Dow Jones chart

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