Levels to watch: FTSE, DAX and Dow

European and US markets continue drifting lower to provide what looks like a good buying opportunity.

London City
Source: Bloomberg

FTSE downtrend persists

The FTSE has sold off into the 61.8% retracement this morning, following a deep retracement yesterday. With the price passing through this level, it looks likely that we are heading towards the 76.4% retracement.

Given the view this current move lower is a retracement of the early-March rally, longs would be preferred around the 76.4% (7276) level. For now, the downtrend remains in play, with a break through 7357 required to negate that bearish outlook.

DAX consolidating with retracement

The DAX also looks to be within a retracement, with a break below 11,780 required to shake that view. Until then, the current price action looks to be temporary, with further gains seemingly around the corner.

For now, the price has been consolidating around the 11,909-11,919 support zone. An hourly close below 11,909 would point towards a deeper retracement, yet until then there is a chance of a bounce from this zone. 

Dow pushes below 76.4% level

The Dow Jones is the deepest of the three, with the price having broken below the 76.4% (20,869) level overnight. We need to see the index break back through 20,951 to gain confidence that the uptrend is back on.

However, given how deep the retracement is, it still makes sense to look for longs here unless the price breaks below 20,775, which would negate the bullish view.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.

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