Levels to watch: FTSE, DAX and Dow

The indices rally has come under pressure this week, yet with a bounce higher this morning, does this present a short opportunity or bullish reversal signal?

US traders in stock exchange
Source: Bloomberg

FTSE rallies from support zone
The FTSE has seen early strength, following a move into the 6237-6259 support zone. Considering the recent creation of lower highs and lows, another leg lower seems the likeliest event. Thus a bearish view is favoured, with the current rally seen as a retracement of yesterday’s move lower.

This bearish view would be negated with an hourly close above 6343. Given that this support zone (6259-6237) is so significant, it could make sense for bears to await a break through this level for confirmation that this selloff is set to continue. 

FTSE 100 chart

DAX turning lower after brief rally
The DAX is clearly turning lower this week, with yesterday seeing the index break below the key Friday low and Fibonacci retracement at 10,319. The current candle is exhibiting a long upper shadow that indicates an inability to sustain gains.

As such, we could see the index turn lower from here. Should that occur, support levels would be 10,228, 10121 and 10,100. A bullish view would come back into play should the index post an hourly close above 10,437.

DAX chart

Dow drifts lower after major rally
The Dow Jones has also seen a period of strength this morning, with a brief foray above 18,030. However, with the creation of lower lows set within a highly extended market, it seems likely another move lower is on the cards.

This bearish view holds unless we see an hourly close above 18,170. Key support levels of note are at 17,845, 17,792 and 17,733. 

Dow Jones chart

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