Levels to watch: FTSE, DAX and Dow

The FTSE is breaking lower, providing a more bearish outlook. With the Dow at a crucial support level, it could just be a matter of time until US markets join in the act.

Traders watching data board
Source: Bloomberg

FTSE breaking below key support level

The FTSE is breaking below the crucial 6809 support level this morning, bringing with it a more bearish outlook for the benchmark. With this level having held up on a number of occasions, an hourly close below 6809 brings significant bearish connotations. That being said, this comes as a countertrend move and while we are likely to see further downside, this could simply be a wider retracement rather than a longer-term market top.

However, for now an hourly close below 6809 would bring in a bearish view, with 6782 and 6754 the next key support levels. The FTSE is suffering the most of the indices, which is clearly down to commodity price weakness. As such, it pays to be aware of where the likes of crude are going too.

DAX continues choppy consolidation

While the DAX did briefly break below the key swing low of 10,410, this index is actually holding up better than the FTSE, with higher highs and higher lows now being formed. This morning is seeing a sharp deterioration and an hourly close below 10,516 which would bring a strong chance we will see a push back towards that crucial 10410 level.

However, until that happens, there is a potential we will see another bounce to continue this wide ranging recovery, with 10,629-10,659 seemingly that backstop to any rally over the past week.

Dow at major head and shoulders neckline

The Dow Jones has sold-off into a crucial support zone, with the past three weeks of price action largely being underpinned by this 18,464 support level. This looks a lot like a complex head and shoulders pattern, which would bring expectations of a sharp move lower upon seeing an hourly close below the 18,464 neckline.

Until that happens, there is a strong chance we will see another bounce. However, with the FTSE breaking lower, perhaps it is only a matter of time until we see this index follow suit.

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