Levels to watch: FTSE and DAX

Overnight weakness provides a more worrying look for European indices. However, with the FSTE rallying from Fibonacci support and the DAX rising from a key support zone, is the sell-off already over?

Trader reflected in data board
Source: Bloomberg

FTSE rallying from Fibonacci retracement

The FTSE sold off sharply overnight, bringing price back into the 76.4% retracement of the rally from 7067. That 7067 level must hold for a bullish outlook to remain in play. Until then, there is still a good chance that we have simply seen a strong retracement and are now going to head higher once more.

DAX showing signs of weakness

Yesterday’s triangle breakdown led to significant losses for the index, with overnight trade resulting in a break back down below 11,426. However, we are seeing a bounce this hour which considering the strength of the 11,426-11,405 support zone, could push price back towards 11,480.

We would need to see a break back above 11,448 to gain confidence of such a move. Until then, there is still a good chance of another leg lower.

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