Levels to watch: FTSE, DAX and Dow

A choppy 24 hours sees the major indices sell-off sharply before rallying once more. Are we set for a more protracted move higher, or will we see another move lower from here?

Data screens reflected in trader's glasses
Source: Bloomberg

FTSE rally falters at key resistance

Yesterday saw a sharp move lower from trendline resistance and simple moving average resistance, with the index continuing its descent once more. The sharp move lower means we remain within a clear downtrend. The establishment of a higher low pointed towards a potential recovery today, with an hourly close above 6775 required to enable that next move towards the 6810 area.

However, we have seen price fail at 6775 and with this current turn lower it looks as though there is a possibility we will see another move lower. This is dependent upon whether we see an hourly close below 6753 to put a more bearish slant on the short-term outlook. 

DAX resurgence proves short-lived

The DAX is selling off following a resurgence after the close yesterday. The key here is the ability to break below 10,490 which would put the pair back into a support area which has underpinned the index over recent weeks. The 10,438-10,481 region is likely to be a big challenge to whether this recent downtrend is going to last.

As such, while we could see further downside from here, it would be prudent to watch out for a potential bounce from that support zone. Coming into today’s US jobs report, we would need to see an hourly close below 10,388 to complete a double top. Conversely, an hourly close above 10,659 would point towards another leg higher for the DAX.

Dow rallying towards key selling area

The Dow Jones has seen a sharp appreciation since the major sell-off early into the US session yesterday. This brings us back into a key Fibonacci resistance zone between the 76.4% and 70% retracements.

Both provide very advantageous risk to reward profiles for a move lower. Essentially, a bearish view is in place unless we see an hourly close above 18,468.

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