Levels to watch: FTSE 100, DAX and Dow
The FTSE 100, DAX and Dow are all rising off the back of a sharp decline into swing low support. However, while we could see further upside, this rebound looks like a precursor to further declines.
FTSE 100 rebounding from key support level
The FTSE 100 is turning higher this morning, following on from a drop into the key 7145 support level.
A break below that level would signal a wider bearish picture coming into play. However, the fact that we reached it in the first place alludes to a break from the wider trend of higher lows. As such, the current rally looks likely to be a retracement before we turn lower once again. With that in mind, a wider bullish outlook would only emerge if we see a rise through the 7286 swing high.
DAX turning higher from 11,840 swing low
The DAX is similarly finding support from a key swing low, with the 11,840 level coming into play.
The rise we are currently seeing is likely to be a breather within the recent trend of lower highs, and further downside does look likely unless we break through the 12,212 swing high. However, until then there is a strong chance that the gains we are currently seeing are a retracement and precursor to further losses.
Dow rising after decline into notable 25,216 level
The Dow Jones is providing yet another example of a stock market turning higher from its notable swing low support.
On this occasion it is the 25,216 support which is helping reverse the price higher, as the index recovers some of the losses seen yesterday. The sheer size of that prior decline means that we could see significant upside even if it is a retracement and precursor to further losses. A rise through 26,019 would bring about a more bullish wider outlook, while the short term looks like a rebound which is expected to be followed by another move lower.
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