Levels to watch: FTSE, DAX and Dow

Further downside looks likely for the indices, yet this could soon provide a buying opportunity.

Data chart
Source: Bloomberg

FTSE turning lower within range

The FTSE is turning lower once more this morning, coming off the back of a rally in towards the top end of a near week-long range for the indice. The inability to break through 7420 highlights the continued creation of lower highs at the top end of this consolidation, with the lows flat lining around 7361.

An hourly close below 7397 would point towards a potential move back to the bottom threshold of this range. We need a break outside the 7431-7361 zone to highlight the possibility for a move out of this range.

DAX breaking lower after retracement

The DAX is turning lower following a period of tightening upside overnight. That shrinking volatility looks set to give way to a sharp move lower, in a continuation of yesterday’s strong downside surge.

A break below 12,434 should give us further confidence that we are set for another leg lower here. Ultimately, we look like we should still have a significant amount of downside to come, with a break up through 12,678 required to negate the bearish view.

Dow weakness provides buying opportunity

The Dow Jones managed to break below the near-term support level of 21,524, bringing about the likely situation of a wider retracement for the index. Yesterday brought a move into the 50% pullback.

However, any further downside into the 61.8% or 76.4% retracements would look like buying opportunities. This bullish view remains unless we break below 21,278.

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