Levels to watch: FTSE, DAX and Dow

Consolidation seems to be the name of the game, with the FTSE and Dow both trading largely sideways, with the DAX proving the main loser so far.

German trader
Source: Bloomberg

FTSE consolidates within wedge  

The FTSE has been consolidating since yesterday’s trendline sell-off. The price action seen over the past fortnight has formed a bullish falling wedge pattern, which is expected to continue apace with another leg lower from here.

A break back up through 7443 would certainly provide a warning sign that we are seeing a bullish wedge breakout. Until then, the recent creation of lower highs and lower lows is expected to persist.

DAX sell-off continues apace

The DAX has been selling off since a deep retracement took us back to the 12,305 mark. Crucially, we did not see a break up through the 12,344 level, meaning that the trend of lower highs and lower lows remain in place.

As such, the recent downtrend remains intact, with further downside looking likely for now. A break back above 12,305 would be required to negate this view.

Awaiting Dow triangle breakout

The Dow Jones has been consolidating over the past three days, with the price forming a symmetrical triangle pattern. We are seeing a bearish break through trendline support currently, yet the key here is the potential to post an hourly close above 22,034 or below 21,965.

That will truly provide us with a directional bias. Until then, the bullish view dictated by recent gains remains dominant.

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