FTSE 100, DAX and Dow uptrend under questions after declines

FTSE 100, DAX and Dow start to show signs of weakness, but will any gains continue recent uptrends or simply provide a precursor to market declines?

FTSE 100 turns higher after bearish break

The FTSE 100 dropped below the 5571 support level overnight, breaking the index out of its bullish trend of higher lows. With the stochastic oscillator hitting the most oversold level in over a month, we are starting to see a rebound come into play, in what looks like the start of a bullish day ahead.

Nevertheless, the drop below 5571 does highlight the potential for this rally to provide a retracement rather than another leg higher with a move through 5944. As such, while the short-term picture does look bullish, it is worthwhile watching out for Fibonacci resistance around 5785 and 5846 as potential bearish reversal points.

DAX rebounding from key support

Unlike the FTSE 100, the DAX failed to break its previous swing low, with the index turning higher above that 10,152 level. That provides a somewhat less bearish picture, with the uptrend still marginally remaining intact.

Certainly, a break below that 10,152 level would bring about a more bearish picture into play. Given that depth of yesterday's decline, there is a possibility that this is going to be a retracement move before we turn lower. However, it makes sense to await a break below the 10,152 level to bring greater certainty of an impending bearish move. Until then, the short-term picture looks bullish as momentum swings back in favour of the bulls.

Dow Jones finds support after declines into trendline support

The Dow Jones declines were limited to a drop into trendline support yesterday, with the index starting to move higher this morning. There is a good chance that this move will continue the recent uptrend, yet it is noticeable how this uptrend is slowing.

As such, we could be in a consolidation phase which is a precursor to further upside. Otherwise, if we saw a break below the 23,089 level, it would start to build a bearish picture once again. As such, a break through 24,011 or 23,089 would give us a better idea of where the next strong move will come.


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