Technical analysis: key levels for FTSE, DAX and Dow

Indices are suffering further falls, hit by the increase in tensions along the Russian-Ukrainian border that raises the prospect of actual military intervention by Russian ground forces.

A chart
Source: Bloomberg

FTSE selling continues

The selling continues on the FTSE 100, and the idea of a dive towards 6500 is becoming a more compelling, if still distant, prospect.

The daily chart shows that 6600 may provide some support, but overall the emphasis has shifted quickly to the downside. The relative strength index is pushing into oversold territory, so we could see a short-term bounce, but the loss of the long-term trendline will make it difficult for the FTSE to form a sustained rally.

Given that we have seen the FTSE shed 200 points in short order, another 100 would not be difficult. The 6500 level could provide the real support that is needed.

DAX daily RSI oversold

DAX watchers will need to keep a close eye on 9000, which has been a major support level in recent months. Any bounce higher needs to close above 9200 to signal a short-term turnaround.

The daily RSI is still showing an oversold reading, and with other momentum indicators at extreme levels a snap back is not to be ruled out.

Low trading volumes, a feature of August trading, are exacerbating the current movements, but if 9000 is lost then the next stop may be 8745.

Dow testing 200-DMA

The Dow Jones is witnessing the first major test of the 200-DMA since the final days of January.

If this is lost then the next area to look for support would be the 16,000 level, representing a drop of just over 6% from the highs above 17,000.

As with other indices, the RSI is oversold – and while the moving average convergence/divergence is still declining it was at far lower levels during the January selloff, suggesting we may see a test of 16,000.

The 200-DMA may yet hold, however, and any move higher would need to clear 16,555 then the 100-DMA at 16,660 to mark the start of a recovery.

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