Levels to watch: FTSE, DAX and Dow

Indices weakness continues to dominate, with the FTSE and Dow asking questions at pivotal support levels.

Barclays trader watching data feeds
Source: Bloomberg

FTSE sell-off fails to fully take hold
Yesterday’s attempted break through the 6237-6249 support zone failed to hold, with the index immediately rallying up to the 6324 resistance level (December 2015 peak). However, we have since seen the index drift lower, with that support zone once more in question.

Given the importance of this zone, a bearish view would only come in the event that we see a break and hold below 6237. Should that occur, we would be looking towards support levels at 6163 and the head and shoulders projection, which coincides with the 6060 support level.

Alternatively, should the 6237-6249 support zone hold, we could see another bounce, with resistance levels of note coming at 6324, 6337 and 6376.

DAX continues to respect Fibonacci levels
The DAX has once more sold off from just above the 76.4% retracement, with the index once more creating a lower high. Given the trend this week of also creating lower lows, there is a good chance the current consolidation will result in another leg lower.

The 61.8% pullback has been providing clear support at 10,204 this morning, yet this is showing signs of being broken. An hourly close below 10,204 would point towards a move down to 10,123. This bearish view remains unless we see a move back above 10,334.

Dow at key juncture
The Dow Jones appears to be in an increasingly perilous situation, where yesterday’s sell-off has brought us back down within close proximity to a crucial support level. The 17,775 low represents the 18 April low, which if broken, would look likely to spark a wider sell-off.

Price is currently attempting to break below a pennant formation, which given the bearish entry, is the direction we would expect a breakout to occur.  Ultimately, the key is whether we see a break and close below 17,775.

Should that occur, we would be looking at 17,731 as the only near term support level. Alternatively, should 17,775 hold, we could see a bounce from this region, with 17,845, 17,862 and 17,913 the next major resistance levels. 

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