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Levels to watch: FTSE, DAX and Dow

US and UK indices drift lower following the sharp appreciation over the past two days. Meanwhile, the DAX attempts to resist the pull of the sellers.

German stock exchange
Source: Bloomberg

FTSE pulls back after new 2016 highs
The FTSE is selling off sharply after initial attempts to break higher at the open. Given the size of the recent rally, there is a clear element of profit taking amid a pullback in crude. Should we see a closed hourly candle below 6353 support, a retracement lower would seem likely, with 6330 and 6324 the next support levels to watch. Ultimately should this occur, it would likely be a temporary retracement of the recent two-day rally.

As such, Fibonacci retracements would be key as we look for the next break higher. Alternately, should the FTSE break through the overnight high of 6372, it would provide a renewed bullish view.

FTSE 100 chart

DAX resurgence in the spotlight
The DAX broke to a new April intraday high this morning, following on from a shallow pullback overnight. However, we are not seeing this immediately follow through with sharp gains, which is a warning sign.

That said, the key is the ability to remain above the overnight low (10,012) as a signal the rally is set to continue. Should it persist, 10,096 and 10,121 are the next key resistance levels.

However, given the sell-off in UK and US markets, a break below 10,012 is certainly a strong possibility, where a closed hourly candle below 10,012 would look towards 10,028 and 9907 as the next support levels.

DAX chart

Dow pulls back
The Dow Jones is also drifting lower this morning, following on from a blockbuster rally yesterday. Currently the 38.2% retracement has provided the backstop.

However, this gradual move lower seems likely to persist unless we see a break and hourly close back up above 17,981.

Support levels of note are 17,871, 17,856, 17,840, 17,821 and 17,790. Meanwhile resistance levels to watch are 17,918 and 17,922.

Dow Jones chart

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