Levels to watch: FTSE 100, DAX and Dow
European markets are showing signs of a potential pullback, with support levels worth watching for bearish signals.
FTSE 100 rally starting to lose traction
The FTSE 100 has started to ease back somewhat, following on from a period of substantial gains over the past three weeks. The rally through 7196 points towards a bullish picture from here on in.
However, with the price breaking below trendline support, there is a question over whether we will begin to see a retracement come into play from here. As such, watch for an hourly close below 7179 as a bearish signal for the short term. Until then, the intraday uptrend still remains intact, with the bullish wider view remaining unless we break below 7064.
DAX weakening from trendline resistance
The DAX has started to turn lower this morning, following on from a rally into trendline resistance.
The ability or inability to break through 11,389 is going to be key in determining where we go from here. As long as we remain below that level, there is a chance we could see this index turn lower, with a break below the 11,254 level providing a short-term bearish view.
Dow consolidates ahead of US return
The Dow Jones was closed yesterday, as the US enjoyed the Presidents Day national holiday. While the market was tradeable with IG, we saw little by way of price action, with the index trading largely flat over the period. Given the sharp rally coming into this sideways consolidation, there is a chance we could see the index retrace some of the rally from 25,276.
However, we would need to see a break below that level to negate this recent uptrend. To the upside, a break through 26,071 would provide us with a bullish continuation signal given it’s existence as a significant historical resistance level.
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