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FTSE, DAX and Dow drift lower ahead of key US CPI release

The FTSE, DAX, and Dow start to weaken, yet we await a break through key support to confirm bearish reversal signals.

FTSE 100 rolling over from deep retracement

The FTSE 100 has started to weaken this week, following a period of gains that have taken the index up into a fresh two-month high.

The ability to maintain this uptrend and push through the prior peaks of 7647-7690 is questionable as it would also bring record highs. Thus, the depth of this rally so far highlights how we could soon see the index roll over and start to head lower before long.

The declines we have seen thus far this week have brought the index back into trendline support. A break below that line would provide an initial warning sign that a bearish phase could be impending.

However, it would ultimately take a move back below 7370 swing-low support to bring greater confidence of that bearish reversal coming into play. Until then, this intraday uptrend remains the dominant short-term pattern to follow.

DAX rolls over, raising the chance of a bearish reversal

The DAX has been on the back foot this week, with the index falling back below the 13572 level and moving progressively closer to the key 13339 support level.

While the wider downtrend does mean that there is a good chance we could be looking at a top here, we are yet to negate the short-term pattern of higher highs and lows. Thus, this pullback could yet find support on the 76.4% Fibonacci level at 13442.

As such, watch out for a potential rebound from that level, with a break below 13442 and crucially 13339 bringing the bears back into play for the DAX.

The Dow consolidating within deep retracement

The Dow has struggled to push higher this week, with traders all looking towards this afternoon's US consumer price inflation (CPI) reading as a driver of sentiment going forward.

The ability to break out from the wider bearish trend is going to be key for this market, with price pushing upwards towards the 33461 swing-high of late.

The long-term trend seen on the daily chart means there is a distinct risk of a bearish turn for the index to continue that pattern. Thus far we are yet to see that reversal signal, with a move below 32381 providing one notable bearish reversal signal if it takes hold.

Without such a move, this intraday uptrend continues to remain the dominant short-term move to follow.


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