Levels to watch: FTSE, DAX and Dow

Markets are still struggling, but the downside momentum of last week has given way to more indecisive, range bound trading. Overall, daily charts remain fairly bearish, but a bounce is possible given oversold conditions. 

Data board
Source: Bloomberg

FTSE 100 clings to 5900
The battle for 5900 goes on, with the index so far clinging on around this area, as it did on Thursday and back in December 2015. We saw buying on Friday but this petered out around 6000 – if further attempts develop then 6000 will be a key battleground again, especially since the downtrend line from 4 January kicks in around here.

The market may find the strength to rally again, but this is likely to be treated as a selling opportunity if it cannot hold above 6000. A break lower targets 5776, the lows from August last year.

DAX remains bearish – for now
The index has clambered its way off the overnight lows, which puts it in good stead for another run towards 10,000 and its own descending trendline from the beginning of the year.

While the daily chart remains bearish for now, any move back through 10,000 would certainly mark the beginning of a leg higher, and continued price action in the 9800 – 10,000 range would suggest the market has entered a consolidation period. Below 9700 the index will target the lows around 9300 from August and September 2015.

Dow plummet may see a pause
With the Dow Jones now oversold for the first time since August, we may be seeing a pause in the move lower. The index remains above the lows of August and September last year (15,255 and 16,000 respectively), so we do have plenty more downside to explore in the short-term if the bears can keep control.

We may see a move back towards the 50-hour simple moving average (16,540), just as we did on Friday, which could provide the cue for fresh selling. However, if we bounce continues above 16,500, we could see the beginning of a move higher, which would target 16,620 and then 16,900. 

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