Levels to watch: FTSE, DAX and Dow

Indices finally show some signs of weakness following the post-Brexit rally. However, is this simply a pause or something indicative of a period of weakness?

Data on screen
Source: Bloomberg

FTSE

It would be too soon to suggest that the circa 80-point drop from the highs of the year thus far marks an end to the rally. Indeed, this shallow pullback is the first real sign of any selling pressure for a week.

If the price holds above 6480 then another test of 6600 is likely, with a close above here targeting 6775 and then 6820. Potential support on the downside lies at 6460 and then 6380 for the FTSE 100.

DAX

A lower close today would likely signal further short-term weakness ahead, given the weakening of the global equity rally.

The price needs to push back towards 9800 and then close above it to maintain upward momentum, in which case the 50-day simple moving average at 9946 and then the 200-day at 10,077 come into view for the DAX.

A close below 9600 would open the way to key support at 9440. 

Dow

For the moment the bounce has stalled below 18,000, so a close above here is needed to maintain the rally. Dow Jones dip buyers might look to step in here, with a push above 18,000 heading towards the April high around 18,200.

A turn lower heads towards the 50-day SMA at 17,750, and then down towards 17,500. The rally appears to be at a critical juncture. 

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