Levels to watch: FTSE, DAX and Dow

Indices are on the turn, with the FTSE leading the way lower. Could we be seeing a top for stock markets?

US traders in a stock exchange
Source: Bloomberg

FTSE in the process of a bearish break

Yesterday’s break below 6690 for the FTSE was an initial bearish signal, with the creation of a new lower low on an intraday basis. However, the more notable bearish signal would be a push below the major swing low of 6663, which would provide increasing confidence that we are on the cusp of a significant pullback.

With price currently breaking through that support level, an hourly close below 6663 would provide us with a bearish view for the coming days. Support levels of note are 6636 and 6606.

DAX testing crucial support level

The DAX is looking one step behind the FTSE, with a break below 10,265 required to provide a bearish head and shoulders formation. Should that occur, we would be looking on recent price action as a topping pattern, with a sell-off expected.

Support levels in this scenario would come in at 10,148 and 10,121. However, we have seen this support hold before and thus we expect 10,265 to be pivotal one way or another.

Dow weakening from SMA resistance

The Dow Jones is moving lower this morning following a rally into the 50-hour simple moving average (SMA). This has provided resistance over the past four trading days.

Given the existence of SMA and trendline resistance up ahead, it makes sense to be bearish for the short-term for a continuation of the lower lows we have seen over the past week

 A bearish view remains unless we see an hourly close above 18,522.

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