Levels to watch: FTSE, DAX and Dow

European indices continue their descent, with overnight gains for the Dow likely to prove fleeting.

Trader on the NYSE
Source: Bloomberg

FTSE 100 downtrend remains in play

The FTSE has been trending lower since the market touched the all-time high of 7130 earlier in the month. The break below 6980 was a bearish signal and led to another sharp deterioration.

Subsequently we have seen price break below the key 6927 support level overnight. This means we have seen the index clear out a crucial zone of resistance encompassing the 13 October low, alongside the August and September highs.

With that in mind, it seems likely we will see the selling continue apace, where the creation of lower lows and lower highs provides the confidence we will see further downside.

DAX turns a corner

The DAX is on the retreat, following a reversal from the crucial 10,807 resistance level earlier in the week. The consolidation overnight is likely to lead to another leg lower, where price would have to break above 10,780 to negate the current downtrend. 

Dow looks likely to turn lower once more

The Dow Jones has gained ground overnight, following a sharp move into the 18,060 support region. While price didn’t fall below the previous low of 18,045, the market seems to be ranging.

Given the weakness coming into this current range, the break from here is likely to be towards the downside and as such, it makes sense to look for a weak session today. Much comes down to earnings data, yet as things stand, a move back towards 18,060 seems likely. 

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