Levels to watch: FTSE, DAX and Dow

FTSE leads the selloff, with DAX and Dow yet to fully complete the bearish picture.

A candlestick chart
Source: Bloomberg

FTSE’s break below 6300 points to further downside

The 6300 support level certainly held for a while yesterday but ultimately it gave way, and crucially the daily candle closed below this crucial support level. As such, we have now created a new low, which points towards further downside to come for the index.

The doji candle posted already this morning points to the possibility of a short-term move higher, yet should that occur, I would expect the market to turn lower once more below the Monday swing high (6360).

The indication that we are set to see a move higher this morning will be sparked by a move back above 6300. Thus, should the price move above 6300 in the near term, I would expect it to turn lower below 6350.

Whether this retracement occurs or not, I am bearish as long as the price remains below 6350, with a move to the next support level of 6252 likely to be on the cards. Beyond that, I could see it returning to 6175 in the medium term.

FTSE 100 chart

DAX moving lower, with choppier market moves likely

The DAX is continuing to move lower this morning, following up a strong selloff yesterday morning. Despite a spike later into the session, all of those gains have been eroded and the index has returned to 9940 support today.

Given the bearish look of both the FTSE and CAC, there is certainly a high likeliness that this is simply lagging them in the downtrend, just like it did for the recent uptrend. For now, we remain above the 9900 support level, and thus I will be looking for that to be broken to give me more confidence that we are truly moving into a bearish phase. However, be aware that this market has been significantly choppier within both rallies and selloffs, and while traders are able to gain a decent amount of pips from each successive move, they are typically preceded or followed by a strong move in the opposite direction.

For now, I am waiting for a break below 9900 and would be hesitant to be bullish simply due to the breaks within the FTSE and CAC. A break below 9900 would look towards 9820 and 9786 as the next major support levels. For bulls, a move back above 10,000 would be needed to gain some sort of recovery hope.

DAX chart

Dow remains above key support level

The Dow Jones continues to consolidate above 17,037 and unlike the European markets, we have seen little to say that this is reversing lower. However, given the moves in European markets, I am aware that we could see the bearish sentiment filter through into this market.

With the price having broken below the 20-period (four hour) SMA, there is a possibility that this could form short-term resistance to push the price back below 17,037. Should we see that level taken out, it would point towards a move back to the 16,964-16,937 support zone. If the price breaks below that zone, it would give me a lot more confidence of a strong selloff for the US index. However for now, I am waiting to see if 17,037 will form support for another move higher (17,175 is next resistance) or if it will break below to bring a selloff down to 16,964-16,937.

Dow Jones chart

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