Levels to watch: FTSE, DAX and Dow

Banking sector worries fuel significant losses at the open. However, will we see these losses extend as we close out the week?

Source: Bloomberg

FTSE tumbles following overnight consolidation

The FTSE 100 is selling off sharply this morning, following on from the losses seen late into yesterday’s session. This comes after the index rallied into a crucial resistance zone around 6930.

For today, further losses seem likely, with an hourly close above 6863 required to negate this view. The next key support levels come around 6803 and 6767.

DAX wedge sell-off approaching notable support

The DAX sold off sharply following yesterday’s wedge breakdown, with the index now passing below the 10,263 support level. This current leg lower has the potential to run given the fact that we have seen price pass back below a notable long-term descending trendline of support.

However, watch out for another important descending trendline, originating from the 22 August low. As such, while a bearish view is in play, watch out for this trendline resistance, which if broken could lead to further sharp losses.

Dow sells into key support zone

The Dow Jones has sold off sharply, with price moving back towards a crucial support zone between 18,049 and 18,067. So far, today's lows have come in around a confluence of two trendlines, which originated around two weeks ago.

As such, while we are clearly trending lower on the short-term, we would need to break back below this big area of support before we can say with confidence that the downtrend is going to continue. 

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.