Levels to watch: FTSE, DAX and Dow

After a heavy down session yesterday, it would not be surprising to see a short-term recovery. It is unlikely to last, however.

Data on screen
Source: Bloomberg

FTSE eyes 6600

The downtrend remains in place, and the overnight rally here does not yet imperil the bearish case. Either the 50-hour EMA at 6560 and/or the downtrend line running from 21 June (c. 6566) should provide resistance.

As before, any bearish crossover in hourly stochastics will provide the signal for fresh intraday selling. The downside target still remains the month lows below 6500.

We would need to see a recovery back above the 6600 level for the index to even consider the possibility that the pullback from 6800 has come to an end.

FTSE 100 chart

DAX could bounce to 50-hour EMA

After the heavy selling in eurozone indices yesterday, we can expect some bounce to materialise, but overall the trend is still down and I would not be surprised to see a test of the 200-day SMA at 10,851 in coming days.

The index may manage a bounce as far as 11,244, the 50-hour EMA and the downtrend line off the April highs, but it would not be remarkable to see it stall at this line as it did yesterday.

Even a move as far as 11,380 would still leave the index below the hourly downtrend line from the highs of last week. 

DAX chart

Dow targets yesterday's lows

Despite the overnight bounce for Dow Jones there is so far no evidence that the sequence of lower highs and lower lows has yet been interrupted. Hourly stochastics are now overbought once more, but as their daily counterparts remain firmly bearish I would view the hourlies as pointing to selling opportunities as and when they occur.

Yesterday’s lows around 17,400 are the immediate target, with a daily close below here still pointing towards the 17,200 level and the lows of the year beyond that. 

Dow chart

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