Levels to watch: FTSE 100, DAX and S&P 500

European markets are under pressure again, but in the US indices are holding on to their gains. 

FTSE 100 drops below 7700

Monday’s breakout seems but a distant memory, as the FTSE 100 falls back below 7700 and towards the trendline it broke at the beginning of the week.

The failure yesterday to break 7772 signified that a deeper retracement was likely, and that is what we have seen so far. A break back below 7660 would be a bearish development.

DAX rally turns sour

The surge at the beginning of the week has proven to be a false dawn for now, although the DAX is still 200 points higher from Friday’s lows.

A recovery back above 12,850 would send a positive signal, raising the prospect of another test of 12,950. If the price falls below 12,742 then we could see a push back towards 12,600.

S&P 500 stuck below 2790

There has been little in the way of weakness here, but a close above 2790 still eludes the S&P 500.

A move below 2750 is needed to suggest a more bearish outlook is at hand. Above 2790, 2803 and then the 2877 high will come into view. 

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