Levels to watch: FTSE, DAX and Dow

Markets continue to move lower, in particularly choppy conditions. However, with major support levels in play, they will provide clues to the next move.

A man looking at a chart
Source: Bloomberg

FTSE at key support which will dictate play

The losses in the FTSE have persisted overnight following a strong evening of trading. This time the top was marked with a spinning top following two bearish engulfing selloffs earlier this week. The price is currently sandwiched between Monday’s low of 6450 and yesterday’s low of 6430. As such, an hourly close below 6430 would be the signal that the losses are to be extended. Otherwise, watch for signs of a possible bounce such as the hammer seen at yesterday’s bottom.

FTSE chart

DAX breaking to new five-month lows

The DAX is ahead of the FTSE in that it has broken below yesterday’s low already this morning, which could be an indicator that the same is going to happen in the FTSE. The price is currently resting on the 200-day SMA at 10,672 which, if we see an hourly close below, would point towards a move back to the descending trendline (currently 10,510) later this week.

DAX chart

Dow volatility points to a possible bounce higher

Dow Jones has been a picture of volatility this week, with the price ranging between 17,800 and 17,500. This has no doubt been a very difficult market to trade. Nevertheless, for those on the right side of the trade it will have paid dividends, given the big moves seen this week, as characterised by the abnormally high ATR (Average True Range) measure of volatility. Given the volatility, I would be very careful trading this market. However, with the range in play, I would be looking for signs of another bounce higher which previously has been instigated by the likes of a hammer candlestick pattern (whereas tops have been signaled by bearish engulfing patterns).

Dow Jones chart

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