Levels to watch: FTSE, DAX and Dow

Indices sell-off sharply at the open, with the FTSE 100 and Dow Jones reaching interesting support areas. However, will the DAX's sell-off lead the way lower for the others?

Data on screen
Source: Bloomberg

FTSE turns lower from resistance

The FTSE 100 is selling off sharply this morning, following a move into the crucial 6932-6955 resistance zone. A break through that zone would have provided us with a strong bullish signal. However, the current turn lower could set us up for a short-term period of weakness. Given that we have now seen an end to the creation of lower highs, there is reason to believe the current pullback will fail to create another lower low.

For now, we would need to see an hourly close below 6809 to bring expectations for further losses, with 6771 and 6754 coming into view. However, until we see an hourly close below 6809, there is the possibility for bulls to jump back on board, with a view that this morning represents a short-term hurdle.

Given that we are currently at the 76.4% retracement, it could be a cheap area for bulls to get in, based on the idea this is yet another short-term retracement within the recent uptrend. As it is turning lower from such a major resistance zone, it probably makes more sense to wait and see whether we break 6809 or not.

DAX reverses within channel

The DAX is also falling, in a continuation of the descending channel that has been in play for over a month now. With price having broken below the important 10,474 support level, the next key level is 10,368.

This has clearly put us into a bearish position for the short-term. However, with the existence of this channel means that such losses are unlikely to last an extended period of time. 

Dow approaches Fibonacci support

The Dow is selling off into the 76.4% retracement this morning, as the futures market follows the Europeans lower. Much like the FTSE, we have a clearly defined support level at 18,068 which needs to be taken out to negate the recent resurgence in this index.

Given the existence of the descending trendline which marked the top of last week’s symmetrical triangle, it looks like an interesting area for a potential short-term long as we aim to catch a bounce. Ultimately, we would need to see an hourly close below 18,068 to negate this recent uptrend.

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