Levels to watch: FTSE, DAX and Dow

Crisis talks in Berlin last night have not assuaged concerns that Greece is headed for the exit, and eurozone indices have fallen back in early trading. 

Data chart
Source: Bloomberg

Yesterday was more of a holding action than anything else, with tentative gains being surrendered during the course of the session. Today the line has been broken and indices are in retreat once more. US markets look more resilient, but even here we have yet to see a meaningful recovery.

FTSE continues to tumble
Yesterday saw the FTSE 100's December trendline being probed and then broken, and today the index has fallen further. Bears should be weary around the 6940 level, since this area stemmed selling yesterday and last week, but an hourly close below this level would signal a bigger move is underway.

With the 50-day simple moving average lost, we look towards the 6900 area as first-line support as it was throughout May. With daily stochastics firmly bearish however, my view shifts to the downside, with the possibility that we will revisit 6800 in due course.

DAX looks to mount a rally
Yesterday’s bounce is a distant memory, although even here there is still an important caveat for over-eager sellers; the October trendline is only a short distance away, around 11,280. This may be the point at which the DAX begins to rally.

A close below this trendline would suggest a move all the way to 10,472 and the 200-day SMA, since there is very little support between these two key areas. A fresh bounce would need to recover the 50-day SMA at 11,786 to signal that the current pullback has run its course.

Dow Jones in the hands of the bears
The Dow Jones continues to hold above 18,000, so we wait for a daily close beneath this level for confirmation that more downside is on its way. However, there is still a case to be made for selling the rallies, as a sequence of lower highs can be seen on the hourly chart. Sellers might choose to use the hourly stochastic indicator to find entry points, allowing it to move into overbought territory before selling.

A move back through the 200-hour SMA at 18,160 might change the dynamic, although I would wait for the daily stochastic indicator to shift back to bullish from its current bearish dimension. 

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Dow Jones

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