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Levels to watch: FTSE, DAX and Dow

European and US indices pull back following a sharp move higher earlier in the week. However, are we seeing a recovery or simply a deep retracement before another move lower?

Data board
Source: Bloomberg

FTSE rally fails to break through key resistance
The FTSE 100 has been enjoying somewhat of a resurgence since Friday, with the index temporarily pushing through trendline resistance in a bid to regain the upper hand following a recent downtrend.

However, the inability to break through 6859 was particularly telling as this means the index continues to establish lower highs to accompany the lower lows. With that in mind, further downside looks the most likely move, unless we see an hourly close above 6859. Support levels of note are 6809 and 6770

FTSE 100 chart

DAX turns lower following key break
Yesterday saw the DAX break through the key 10,659 resistance level. However, this proved fleeting, with a head and shoulders pattern soon giving way to the sharp move lower we are seeing this morning.

That being said, we are clearly trending higher on the hourly chart and we would need an hourly close below 10,562 to negate this short-term bullish outlook. With that in mind, the current pullback could be an interesting area to get long around the 76.4% pullback (10,592). Clearly we saw a break through resistance yesterday and there is a good chance that we will see this index push higher once more from here. 

DAX chart

Dow selling off from Fibonacci resistance
The Dow has been rounding off over the past week, with a move into the 76.4% Fibonacci resistance providing yet another likely move lower. In order to break out of this recent downtrend, we would need to see an hourly close above 18,575 and until that happens, another leg lower seems likely from here. Support levels of note are found at 18,332 and 18,245.

Dow Jones chart

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