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Levels to watch: FTSE 100, DAX and Dow

The FTSE 100 and the DAX are key crossroads where we could see short-term downside. Meanwhile, the Dow is attempting to break higher after a pullback overnight.

IG Analyst

Publication date : 2018-06-05T09:20:39+0100

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FTSE 100 pullback brings chance of bearish shift

The FTSE 100 fell below trendline support this morning, as the ascent seen throughout the past week seems to be showing signs of slowing.

However, with the price still above the 7692 swing low, the short-term rally still remains intact. Given the breakdown from a rising wedge formation, there is a chance we could start to see a more bearish shift in mentality if the price falls below that 7692 swing low.

FTSE 100 chart

FTSE 100 chart

FTSE 100 chart

DAX heading back into key resistance

The DAX is similarly heading higher despite recent pullbacks, with the price heading into the crucial 12,833 resistance level once again.

The last occasion saw a sharp drop for the DAX upon reaching this crucial level, highlighting the importance of this area of resistance. As such, the market bias is dictated by the ability or inability to break and close above the 12,834-12,846. A break below 12,712 would provide a bearish view for the pair.

DAX chart

DAX chart

DAX chart

Dow rebound continues to push onwards

The Dow Jones has managed to break through the 24,715 mark last week, paving the way for a recovery phase which is rooted in a bottom that seems to have been building over recent months.

An overnight pullback has done little to dent this bullish story, with the current bullish engulfing pattern pointing towards a likely next leg higher from here. Given the shallow nature of this pullback, it makes sense to await an hourly close above 24,860 to signal another leg higher for the index. Until then, there is still a chance we will see a deeper retracement come into play.

Dow Jones chart

Dow Jones chart

Dow Jones chart

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