Levels to watch: FTSE, DAX and Dow

Inaction from the BoJ puts the indices under pressure this morning. However, as some of those losses are gradually regained, are further losses on the cards?

Source: Bloomberg

FTSE plummets after BoJ inaction
The index has seen overnight strength come crashing down with a bang this morning, after inaction from the BoJ dashed hopes of further monetary easing for the time being.

Given that yesterday’s rally failed to regain the 6350 level, we remain within a short-term downtrend, where the key to today’s price action is whether the 6249-6237 support zone will hold. This region between the March high and Mondays lows will need to be broken to bring expectations of further losses.

As such, a closed hourly candle below 6237 would look towards 6163 as the next key support level. Alternately, should this support zone hold once more, we could see the index continue to trade in a relatively choppy manner. 

DAX falls to new low
The index has similarly sold-off this morning, posting a new nine day low. Clearly we are seeing a relatively shallow sell-off in this index and as such, it makes more sense to await another deep retracement to then look for shorts rather than getting short at this point in time.

The past two pullbacks have come past the 76.4% retracement and thus a rally into 10,325 could give us another possible bearish reversal location. This bearish view remains unless we see price break through 10,363 resistance.

Dow turnaround comes into question
The index has been attempting to gradually turn itself around, with the creation of intraday higher highs and higher lows this week. However, with this morning’s BoJ fueled sell-off, we have seen price break through 17,913 support.

While this could be a minor blip, it will be interesting to see if any recovery manages to regain 18,085 resistance. As such, we could see some form of short-term recovery, but the inability to break through 18,085 could point towards further losses, with 17,913 and 17,845 the next support levels of note.

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