DAX breaks lower and approaches support zone
Yesterday saw the DAX close below the inside trendline on the four-hour chart, and thus we are now looking towards the next major support to come into play at the 10,856 level (38.2% Fibonacci retracement and June low).
I am looking for a bounce higher from the green triangle, which represents the area between the 10,856 horizontal and March descending trendline. As such I am bearish but, like the FTSE, a bounce would be likely later in the week.
Dow Jones selloff brings us back to yesterday’s support level
Despite a strong bout of buying in the backend of yesterday’s session, we have seen the sellers come back in this morning, and the signal is that we are likely to see a move down to the 17,686 support level at some point today. This represents the lows from both May and June. The crucial thing about this level is that a break below would represent the creation of a new lower low, which would replicate the more bearish signals coming from the likes of the FTSE and DAX.
For today, I expect a move lower towards 17,686 and if intraday candles move below this level, a move down towards 17,549 would be likely. However, a pullback to 17,686 as new resistance would be my selling preference should that occur.
With the Dow now into its fourth straight week of losses, (last seen in August 2013) there is likely to be some sort of respite soon and, like the FTSE and DAX, I do expect to see some sort of bounce later this week.