Levels to watch: FTSE, DAX and Dow

Following Friday’s blockbuster sell-off, this week looks likely to begin where we left off, with European and US indices heavily in the red. However, given the size of recent moves, any bounce could be substantial and as such traders will be wary.

Data trader monitoring screens
Source: Bloomberg

FTSE tumbles following US-led sell-off

The FTSE really lost it in style on Friday, with the index crashing through a number of crucial support levels to negate any bullish sentiment that has built up over the past week.

Given the sharp move we are dealing with, it is worthwhile trading the shorter-term, with shorts preferred until we see a new higher high created.

With that in mind, watch out for another leg lower, with the bearish trend negated should price break back above 6715.

DAX rally falls short for now

The DAX has attempted to regain ground this morning, following the dramatic deterioration we saw Since Friday. The first major resistance level of note here is the key swing low of 10,438, which price has failed to regain.

Given the long upper wicks evident on the hourly chart, it seems relatively likely we will see this market start to weaken once more. However, be aware that any failure to fall below 10,311 could set us up for a rebound, given the higher lower scenario.

Dow consolidates following sell-off

The Dow has suffered more than most since Friday and this morning has seen those losses continue. However, with price currently consolidating, we are looking at the potential for a bounce from here. There are few major swing highs to watch out for as a sign of a reversal.

However, it could be worth watching the shorter-term timeframes to follow whether we are indeed seeing a period of respite within the trend. Irrespective of any potential bounce, we look likely to return lower soon enough. That said, given the size of the sell-off, it pays to be cautious given the likely size of any rebound.

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