Levels to watch: FTSE, DAX and Dow

Stock market weakness raises questions over the potential for further losses, yet with pullbacks come opportunities for recent trending markets.

Source: Bloomberg

FTSE 100 pulls back to key trendline and Fibonacci support

The FTSE has moved lower following a sharp gap higher at the open. Crucially, we have seen price pull back to an ascending trendline, which is accompanied by the 6950 level and 70%-76.4% retracements.

This area of support has the potential to push the price higher once more, for a continuation of the uptrend in play in December to date.

An hourly close below 6927 would provide a strong signal that this trend could be coming under pressure and as long as price remains above that level, a bullish short-term view remains in play. 

DAX pulls back to deep retracement

The DAX has pulled back to the 76.4% retracement this morning, following on from a gap higher at the open. The index has been seeing substantial gains over the past week, following a break through the key 10,607 level.

With that in mind, there is a chance we could see the index turn higher once more in a continuation of this strength. Thus, as long as we do not see a break below 11,146, a bullish outlook remains in place for a push through 11,325.

Dow weakness unlikely to last

The Dow Jones has been consolidating in early trade this morning, following on from an incredibly bullish end to the week. The current descending triangle pattern does not need to be the be all and end all of near-term price action, with a deeper retracement unlikely to negate the uptrend while a push through trendline resistance would not necessarily indicate a full resurgence.

The key here is that an hourly close above 19,843 would be required to give confidence of another leg higher, while a bullish outlook remains as long as we do not see price break back below 19,596. Meanwhile, a deeper retracement or immediate break higher can both be played in the favour of the trend. We would need an hourly close below 19,596 to negate the uptrend. 

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.