Levels to watch: FTSE, DAX and Dow

Following a period of weakness, we are starting to see some value in getting long for the major indices.

Data on screen
Source: Bloomberg

FTSE breaking from triangle

The FTSE 100 has been trading within a triangle formation, with horizontal support at 6847 being broken alongside a subsequent descending trendline. The key thing to note here is that despite this short-term downtrend, we have not taken out the 6809 swing low and as such, the uptrend remains in play, albeit with a deep retracement.

With that in mind, it is worth watching out for a potential bullish reversal to see the index back onto the wider uptrend. The proximity to the 76.4% retracement means we would get a strong risk/reward profile for such a rally.

This bullish view is in place unless we see an hourly close below 6809.

FTSE

DAX falls into Fibonacci support

It's a similar story for the DAX, with the index finding support on the 76.4% support level over recent trading days. Essentially, the uptrend of the past two months remains in place and with price falling into a major support zone (April and June peaks) which coincides with the 76.4% Fibonacci retracement, longs are preferred from here.

We would need to see an hourly close below 10,410 to negate this bullish view.

DAX

Dow trading within triangle formation

The Dow Jones is trading within a symmetrical triangle formation, which necessitates a breakout before a directional bias can be taken. However, it is well worth noting that the market tends to have sharp rallies and slow downturns, which leads us to believe we will see a sharp appreciation into trendline resistance this morning.

However, in terms of the breakout, we will need an hourly close above 18,585 to provide a bullish view, or else an hourly close below 18,490 to provide a bearish view. Until then, it could be worth looking for opportunities within this current triangle pattern.

Dow Jones

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