Levels to watch: FTSE, DAX and Dow

Yesterday’s selloffs in global indices brings question marks as to whether we could see the same again today. However, with the European Central Bank meeting around the corner, fundamentals will soon have their say.

A candlestick chart
Source: Bloomberg

FTSE warning signs appear

The FTSE has been trading within a rising wedge formation over the past week, with the price increasingly moving out of the pattern as we reach the apex. The strong selloff seen yesterday acted as a warning sign, with the close below 6400 notable. A rising wedge is a bearish pattern and thus there was always a good chance of a selloff on the break out.

This morning is seeing the price moving higher through 6400 resistance, yet the crucial question is whether a break through 6450 will occur to resume the uptrend. If not, this could be the beginning of a correction lower, should the price close below 6365. Support levels of note are at 6400, 6371 and 6365, with resistance at 6429, 6448 and 6460.

DAX upside could be short-lived

The DAX sold off heavily yesterday after the price closed below the crucial 11,242 support level. While we are seeing a decent rally this morning, there is a clear trend in play over the past two days which points towards the possibility of further losses. For the bullish outlook to return, the price would need to break back above 11,337. Until that happens, another move lower seems likely. Support levels of note are at 11,166, 11,116 and 11,077, while resistance levels to watch are 11,242, 11,337 and 11,433.

Dow selloff brings indecision

The Dow Jones sold off sharply yesterday, bringing a move below 17,721 support. This follows on from the creation of a new high earlier into yesterday’s trading, bringing both a higher high and lower low. This broadening formation can be difficult to trade and thus we await further signals.

Given the turn lower seen in European markets, it would not be surprising to see the Dow fail to retake 17,913 before selling off once more. However, with the ECB potentially implementing further easing, fundamentals have the potential to dominate. Look out for a break below 17,703 for a bearish outlook, or above 17,913 for a bullish outlook. Resistance levels of note are 17,844, 17,913 and 17,978. Support levels are 17,763, 17,703 and 17,606.

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