Levels to watch: FTSE, DAX and Dow

European indices are looking ugly as a brief reprieve proves short-lived.

Data on screens
Source: Bloomberg

FTSE bounce short-lived as resistance points to losses

In much the same way as it seemed difficult for the FTSE 100 to move below a whole raft of support levels between 6624 and 6691, the fact that we have now seen it happen means that any resurgence is likely to run into significant resistance.

We have seen that perfectly today, with price failing at the first of those levels (6624). Given this, it is clear that there is likely to be an easier path for bears than bulls at the moment and as such I am bearish for another leg down towards 6500 and on to 6440.

The bearish engulfing being formed provides yet more confidence of this possible move. 

FTSE 100 chart

DAX sells off from channel resistance to paint bearish picture

The DAX is an even clearer cut picture, with the upper threshold of the descending channel providing a great resistance point. This has been sold into today and the current candle provides a very high likeliness of an extremely strong bearish engulfing pattern.

With that in mind, a return to 11,030 seems highly likely and further losses towards 10,950 are also probable.

DAX chart

Dow continues to trend higher, yet will European contagion occur?

The Dow Jones looks significantly more bullish than its European counterparts given the continued creation of higher highs and higher lows over the past two days. However, I would be wary given the backdrop of falling markets elsewhere.

The key resistance levels to watch out for would come in around 17,686 and 17,706. Given the bearish trend in other markets, I would be surprised to not see some weakness begin to come into play around those levels. 

Dow Jones chart

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