Levels to watch: FTSE, DAX and Dow

European indices seem to be suffering heavily after strong PMI numbers pointed towards a potential relaxing in the dovish policies at the Bank of England. 

Data on a screen
Source: Bloomberg

However, with US PMI and employment numbers deteriorating, the story is quite the opposite with a more dovish outlook looking helping American indices outperform their European counterparts.

FTSE falling from SMA resistance

The FTSE 100 is looking to push lower once more this morning, following on from a rally into the 100-day simple moving average. This moving average has provided relatively reliable support and resistance on a number of occasions recently and this is another to add to the list. With price having now moved below the 6817 support level set yesterday, another move lower looks likely. Interestingly, such a move could bring the index down into a confluence of both 76.4% and trendline support around 6796.

This should provide us with an interesting bullish reversal area. However, for now we are likely to see further short-term losses into that 6796 support area, at which a more bullish view comes into play.

DAX attempts to break back into range

The DAX has failed to really capitalise on the bullish breakout seen earlier in the month, with the 10,659 support level coming into play once more today. A break and hourly close below this level would provide a clue that we are likely to see this sell-off continue as price sinks back into that 200-point range.

As such, watch out for the reaction to this level as a cue to where the next move could lay. An inability to break below 10,659 may spark a resurgence, whereas an hourly close below this level would provide us with a bearish view for the coming days.

Dow resurgence continues

The Dow Jones has seen a strong turnaround in fortunes over the past week, with price breaking through the swing high of 18,518 to negate the downtrend of late August. There is a clear overbought scenario in the stochastic, with the indicator also providing a bearish divergence which could point towards short-term weakness.

However, any such pullback would be seen as a retracement and as such, we could look out for potential longs around 76.4% (18,473) and 61.8% (18,488) Fibonacci levels. We would need to see an hourly close below 18,448 to negate the current bullish outlook.

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