Levels to watch: FTSE 100, DAX and Dow

Overnight consolidation has done little to dampen the short-term bearish outlook evident in European and US indices this week, with further downside expected from here.

FTSE 100 looks set for further downside

The FTSE 100 sold off after breaking lower from a rising wedge at the key 7312 resistance level yesterday, with the price consolidating overnight.

This period of sideways consolidation is likely to give way to further downside, with the index looking likely to retrace the 6979-7325 rally. As such, unless we break through the 7325 level, a bearish short-term view remains in play.

DAX resurgence unlikely to last

The DAX has been marginally gaining ground overnight, following on from a fall out of a rising wedge formation. This points towards further downside from here.

Near-term resistance is provided at 12,426, yet it would take a move back above 12,553 to negate the current bearish short-term view.

Dow triangle points to further downside

The Dow Jones is trading within a symmetrical triangle formation, following the rally into 25,433 last week. A bearish breakdown is expected from here, with the 25,066 mark key to signaling the start of another leg lower.

Watch for an hourly close below that level as a signal of impending weakness. Alternatively, a break above 25,433 would signal the end of this current short-term downturn.

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