Levels to watch: FTSE 100, DAX and Dow

FTSE 100, DAX and Dow all drift lower, yet the European indices are looking bearish from a wider context, will this be the start of a bearish phase or just a temporary blip?

FTSE 100 consolidates at 61.8% resistance

The FTSE 100 has been drifting lower in the wake of a rally into the 61.8% retracement and 200-day simple moving average (SMA) on the four-hour chart. This looks to be part of a wider retracement, and thus we could turn lower once more from either the 61.8% or 76.4% Fibonacci retracements.

As such, watch for whether we push above the 7500 mark in early trade as a signal of a potential short-term rally into 7550. Alternatively, unless we break 7500, there is a strong chance that we will continue to drift lower from this resistance confluence.

DAX retraces from key resistance zone

The DAX has started to turn lower from a crucial area of resistance. The wider context of lower highs comes back into play with the recent rally taking us back in towards trendline resistance and the 76.4% retracement level. This means that to continue that downtrend, we would need to start turning lower soon.

This current sell-off doesn’t exactly scream reversal, given the gradual and shallow nature of the pullback. However, be aware that we could start ramping up the losses, where any rally would need to push through the 12,500 region to start questioning the validity of that long-term downtrend.

Dow pullback looks short-term in nature

The Dow Jones has similarly seen a gradual pullback following on from the recent gains. Much like the others there is little sign that this will be a long-lasting reversal quite yet.

However, while the FTSE 100 and DAX both look bearish on a wider context, the Dow does not. Thus, look for a possible rally through 26,705 as a signal of impending upside for the index.

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