Levels to watch: FTSE, DAX and Dow

Indices weakness looks set to remain the dominant trend for the day, yet with the Dow beginning to show some signs of strength, we await the resolution to this divergence.

US traders in a stock exchange
Source: Bloomberg

FTSE bounce hits Fibonacci resistance
Yesterday’s FTSE rebound failed to muster much more than a whimper, with a shallow retracement to the 38.2% Fibonacci level (6210) leading to further losses. The key to another leg lower is a closed hourly candle below yesterday’s low of 6158.5, which would look towards 6107 and 6060 which are hugely important support levels.

Alternately, a more bullish view would only come about through a closed hourly candle above 6210. This would look towards 6237 as the next resistance.

However, the bearish trend remains the preferred option for the short-term.

DAX fails to regain much ground
The DAX has been gradually drifting lower overnight, following on from the sharp sell-off in the early morning. The clear channel formation has seen a downside fake-out, highlighting the risk of trading a breakout.

Given that a bearish view is held unless we see a break through 10,154, another leg lower seems the likeliest event in the short-term. However, any closed hourly candle above 9972 would provide an increased likeliness of a stronger move higher, with 10,012 and 10,042 the next resistance levels. 

Dow shows signs of improvement
The Dow Jones has begun to show some signs of improvement, which is not reflected in the FTSE and DAX. Yesterday’s selling failed to break through the 29 March low of 17,648, meaning we have now seen a higher low in place.

With current price trading in a symmetrical triangle formation, we are awaiting a breakout for direction. As such, a closed hourly candle above 17,781 would provide a more bullish short-term view, with 17,804 and 17,845 the next resistance levels of note.

Alternately, a close below yesterday’s low of 17,666 would provide a more bearish emphasis, with 17,484 the next major support level in view.

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