Levels to watch: FTSE, DAX and S&P 500

Weakness persists across indices, although we have only seen modest losses over the past week.

Wall Street
Source: Bloomberg

FTSE 100 with a chance to rally?

The FTSE has steadily dropped back over the past week, but found support overnight at the 200-hour simple moving average (7321).

It does not yet look as if the rally is back on, but if the price moves above 7330, a bottom may be in place. A drop through 7320 would suggest a further move to 7260 and potentially lower.

DAX shows potential to bounce

A steep pullback on the DAX since the 12,100 peak shows no sign of stopping yet, although the price is trying to hold the area around 11,900. If it can bounce from here, the broader trend is still intact and might lead to a move back in the direction of 12,100.

A drop below 11,900 would head towards 11,800 and then 11,692. 

S&P 500 relying on its overbought condition

The S&P 500's 1.4% drop since last Wednesday is similar to that suffered by the index at the end of December. In both cases it has worked off its overbought condition, which raises the prospect of a turn higher.

This will need a move back above 2370. Potential areas of short-term support are 2357 and then 2350, while on the upside a move above 2370 would suggest a move back to 2400.

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