Levels to watch: FTSE, DAX and Dow

A big selloff in indices hits the buffers and both the DAX and FTSE meet notable support levels.

A candlestick chart
Source: Bloomberg

FTSE selloff brings us to notable support level

Yesterday saw the 6050 mark breached and subsequently the price sold off heavily to our 6000 and 5950 support levels. However, further downside has now brought us to the 5878 level which represents the 23 September low.

Ultimately I remain bearish and do expect us to see and break below 5768. However, there is of course a possibility of a bounce at any major support level, and thus the reaction to this level will dictate my short-term outlook.

A close below 5878 on even a 30-minute or hour chart would give me confidence that the selling will persist this morning. However, signals on short-term intraday charts that a bullish short-term reversal could be in the offing would point towards a possible spike, where the 5950 resistance level represents probably the most important near-term level to watch.

DAX reaches August support level for likely bounce

Just like the FTSE is at an important support level, so is the DAX and on this occasion, the level is even more notable. The fact that the price is at the August low of 9322 means we are highly likely to get some sort of response, and this would also influence the FTSE in turn. Thus for now, I am looking for some form of bounce higher, which would be negated if the price closes below 9322.

I remain bearish for the overall index and expect another leg lower in the near future; however, for now a bounce looks likely. The key level to watch for any upside would be 9510, which if broken would bring expectations of a more extended move towards the 9680 region.

Dow selloff breaks below support to keep downtrend in tact

The Dow Jones saw a major bout of selling yesterday, with almost 500 points between yesterday’s high and this morning’s low. The 16,015 support level was a key hurdle to get over and now that it has happened, any near-term bounce would simply form part of the ongoing downtrend that has been in play over the past week.

I would need to see a move back above 16,065 for confidence of a decent bounce higher towards the 16,161 and 16,250 region. However, bear in mind that even if we do see a move higher, I remain bearish, and while the price remains below 16,065, I see room for further downside.

It is the existence of the major support levels in both the FTSE and DAX that make me believe that we could possibly see this selloff hit the buffers for the time being. 

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.