Levels to watch: FTSE, DAX and Dow

European markets show signs of turning lower, while the Dow Jones continues to consolidate sideways.

Source: Bloomberg

FTSE sell-off negates previous gains

The FTSE 100 is selling off following a rally which crucially failed to regain the 6854 resistance level. This means the perception of price action as a retracement of the 6854-6707 sell-off was correct.

As such, we are now in the descendancy which points towards a fall back below 6707. The near-term support level to watch is 6731, which if broken would provide greater confidence we are going to see a sell-off as the next move for the index.

A break back above 6854 would negate this bearish view.

DAX looks set for sell-off

The DAX has dropped below the key 10,669 support level yesterday, following a third failure to break through the key 10,807 resistance.

This level has typically been the region of reversals in the past and we look likely to be seeing something similar once more. As such, a bearish view comes into play here unless we see a break through 10,807.

A greater confidence would come in the event of a break and hourly close below 10,574.

Dow continues to drag its heels

The Dow Jones remains within a range of 18,815-18,971, with price now in its fourth day of consolidation.

We await a break from this pattern to dictate the next move, with an hourly close below 18,815 providing a bearish short-term view and an hourly close above 18,971 giving a bulling continuation signal. 

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