Levels to watch: FTSE, DAX and Dow

After a relatively dovish set of minutes, we are seeing stock markets turn lower, in a sign that the selling may not be over yet.

US trader
Source: Bloomberg

FTSE turning lower from trendline resistance

The FTSE 100 enjoyed a substantial rally off the back of yesterday’s Federal Open Market Committee minutes. However, we are now seeing the market turn lower from both trendline and simple moving average (50) resistance. The crucial thing here is the ability to break below 6878, where an hourly close below this level points towards further downside to come.

Alternately, an hourly close above yesterday’s high of 6919 would look to negate the recent sell-off and would point towards a resurgence for the FTSE. Support levels of note are 6878, 6864 and 6847, with resistance at 6919 and 6950. 

DAX selling off from head and shoulders neckline

The DAX also enjoyed a resurgence yesterday, with price rallying up to the crucial 10,629 resistance level. This level represents the neckline of the head and shoulders pattern which was completed yesterday. With that in mind, a bearish view is preferred, with an hourly close below 10,588 pointing towards a move back down to the 10,532 and 10,513 support levels.

Essentially, a break above 10,629 and especially 10,704 are needed to negate this bearish view.

Dow turning lower from Fibonacci retracement

The Dow Jones has rallied into the 61.8% retracement level overnight, with price having turned lower since. Looking at the wider perspective, there is a chance we could see a larger double-top formation being created, with yesterday’s break below 18,533 pointing towards yesterday’s rally being a retracement rather than a recovery.

Thus another leg lower seems likely, with 18,593 and 18,622 resistance levels of particular interest should we see any further gains. Support levels to watch out for to the downside are 18,533 and 18,469. We would ultimately need to see an hourly close above 18,669 to negate this bearish view. 

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