Levels to watch: FTSE 100, DAX and Dow

Global indices have been drifting lower after yesterday’s hawkish Fed meeting. However, with recent trends remaining intact, this could be a good time to look for a bounce in European and US markets.

Wall Street
Source: Bloomberg

FTSE 100 falls back into trendline support

The FTSE 100 has dropped into trendline support overnight, following a hawkish meeting from the Federal Open Market Committee (FOMC). Today sees the emphasis shift onto the European Central Bank (ECB), where we could see a similarly hawkish shift towards ending quantitative easing (QE).

For now, the FTSE 100 remains within a trend of higher lows and flatlining highs. As such, a bullish outlook is in play following the fall into a deep retracement. The current candle is highlighting the respect of that trendline which dates back to November 2016. A bullish view is in play for a move back into the 7761-7772 region. A break below 7638 would negate this.

DAX retracement likely to be short-lived

The DAX has similarly seen downside overnight, bringing the index close to yesterday’s 12,779 low.

A break below that level would simply look like a retracement of the 12,611-12,956 rally, at which point we will utilize the Fibonacci levels for a bullish entry. Until then, the ability to remain above 12,779 should signal whether we are set for a push higher or drift lower in the short term.

Dow drops below Fibonacci support

The Dow Jones has managed to break lower following a slow in the recent uptrend, as signified by the break through trendline support.

The price has since broken below the 76.4% retracement, highlighting the potential for a further breakdown. Nevertheless, there is still a strong chance that we will see this uptrend come back on track with a rally from here. A break below 25,075 would provide that bearish signal, and until that happens a rebound seems likely. 

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