Levels to watch: FTSE, DAX and Dow

European and US indices are following their Asian counterparts lower, yet are we simply seeing a retracement before another leg higher?

US trader
Source: Bloomberg

FTSE heading lower, in potential head and shoulders formation
The FTSE 100 is turning lower once more this morning, following a failed attempt to break higher yesterday. The key thing to note is that we did not see a break through Tuesday’s high of 6324 and thus whilst this could be a temporary breather, a break below 6258 would create a bearish head and shoulders pattern.

Given the uptrend in play in June so far, it makes sense to expect another rally until we see a break below that key neckline. However, be aware that the 6258 level represents the key turning point where the uptrend could begin to come under serious pressure.

DAX tumbles into crucial support level
​The index has sold off sharply since creating a new intraday high on Tuesday. The fact that we saw such a move from the key 10,121 support level pointed towards a good chance that further gains were around the corner.

However, with the DAX currently tumbling back towards the key 10,121 support level, the reaction to that historically important area will determine the outlook for the day. Until we see a break back below 10,038, there is also a chance that we are seeing a deep retracement here, with the 76.4% Fibonacci level also a key area of support (10,103).

Dow uptrend remains intact
The index appears to be holding up well compared with its European counterparts, as the index continues to create higher highs and lows. We are seeing a retracement currently, yet this simply brings the Fibonacci levels into view, with 17,965, 17,952 and 17,936 the key levels that could spark another move higher. Our bullish view remains unless we see an hourly close back below 17,911.

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