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

After US markets took a turn southward on Friday, the selling has resumed across Europe.

FTSE 100 turns sharply lower

Last week saw the FTSE 100 shed most of the ground gained in the second half of September, in a classic demonstration of markets ‘taking the stairs up, but the lift down’.

Friday’s low of 7296.1 is the first area to watch, and then support at 7279, followed by the September lows around 7225. Intraday rallies will need to be closely watched. If a short-term bounce fails to recover 7400 then there is likely further downside ahead.

Bearish pressure on DAX continues

An early rally has been sold into here for DAX, and the break below the 12,200 area that we saw on Friday continues to cast a bearish pall over the index.

It registered a lower high at the end of September, and if further losses occur then the lows of early September around 11,900 are a possible target. A recovery back above 12,200 might provide some short-term relief.

S&P 500 back to key moving average

The S&P 500 returned to the 50-day simple moving average (SMA) at 2880 for the first time since the end of July, and it also tested the 2870 area that provided a foundation for buyers back in early September.

A close below 2864 would be a bearish development, but rising support from the bottom end of the current channel would suggest a bounce from around 2854.

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