Levels to watch: FTSE, DAX and Dow

Last week’s bearish moves point towards further losses to start the week.

A trader on the phone and looking at data
Source: Bloomberg

FTSE 100 consolidated around 6808

The selloff in the FTSE has continued this morning, off the back of a week which saw major trendlines and support levels taken out.

The strength of Friday’s US jobs report provided the adverse reaction in the markets as rate hike expectations were brought forward, sending indices lower. The major support level of 6808 has been breached both today and Friday, which points to a likely close lower in the near future. Thus with the creation of new lower lows on intraday charts, I am bearish until we see a new higher high created. As long as the price remains below 6850, I expect the selloff to continue.

DAX continues to track trendline lower

The DAX is drifting lower, closely tracking the descending inside trendline from mid-April. I do see this as a temporary period of weakness, and as a result expect to see a bounce higher in the near future.

The support level of 11,166 has been temporarily breached but not closed below, and there is a possibility that we could see that strength begin today. Nevertheless, given the fact that we have been trading in the same manner for some time now, I am waiting to see a move above the recent swing high (11,452) to give me confidence that the buyers are coming back into the market.

For the meanwhile, I do expect to see some form of bounce in the near future, into the 11,300 region. However, whether it manages to breach previous highs or not will be key. 

Dow Jones consolidating following trendline break

Friday’s close below the ascending trendline from October is no doubt important given the longevity of the line. However, to provide a signal of a protracted move lower, I would need to see major horizontal support levels breached. That would mean a move below 17,686. For now, we are clearly in a temporary consolidation mode and given that this comes off the back of a sharp move lower, I expect to see the downward trend continue for the index.

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