Levels to watch: FTSE 100, DAX and Dow

European markets continue to underperform against their US counterparts, with the Dow reaching fresh highs this week.

FTSE 100 continues to consolidate after fall

The FTSE 100 remains in consolidation mode, following Tuesday’s fall through trendline support. The 7711 level is likely to prove pivotal from here, with an hourly close below there providing a bearish signal for further losses.

To the upside, a rally through 7749 would go some way to negating the current weaker outlook. However, with the price having sold off from its previous trend, this current consolidation looks likely to lead to further losses.

DAX begins to turn lower once again

The DAX is turning towards the downside once more this morning, following a rally into the 61.8% retracement.

The previous break above 13,296 and below 13,171 provides a somewhat inconsistent view of the intraday trend. However, given the general downward trend over the past two weeks, there is a strong chance we will see another leg lower for the DAX from here. A break above 13,354 would negate this view.

Dow consolidates from fresh highs

The Dow Jones has been consolidating since reaching new record highs yesterday, with the price heading back to the crucial near-term support level of 26,053.

Should we see that level broken, it could lead to a more protracted retracement of the 25,873-26,155 move. In either case, it is likely that we will soon see the index reach fresh highs once more, irrespective of whether we see a deep or shallow retracement. A break below 25,873 would throw some element of doubt onto that view.

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