Levels to watch: FTSE, DAX and Dow

The FTSE, DAX and Dow look set for some short term losses, but there is a bullish story to be told for each and we could soon see a bounce for stocks.

Deutsche Borse: German stock exchange
Source: Bloomberg

FTSE breaking lower, yet upside story remains

A pretty radical 24 hours have seen a sharp appreciation of the GBP/USD pair thanks to Trump’s latest comments, sending the FTSE lower. We have seen a move below 7331 support, which is a little worrying.

However, considering the strength of the 7254 support level, coupled with the fact that we broke into a new higher high on Tuesday, it looks like we could be looking at a retracement of the rally from 7254. With that in mind, the move from the 7291 (76.4%) to 7300 (70%) levels looks attractive for potential longs. We would need to break below the 7253 to really spell trouble for the index, and until then we could see a resurgence for the FTSE.

DAX turning lower from trendline resistance

The DAX rallied into trendline resistance yesterday, with the index turning lower in response. We are back at the 50% retracement, with a zone of trendline support just below the current price.

A break below that zone would be worrying, yet we would need to fall below 11,850 to really start to look bearish for the DAX. As such, as long as we do not fall below 11,850, any further downside would simply look like a better buying opportunity. 

Dow falls back into critical support level

The Dow Jones is approaching an absolutely crucial support level this morning, with the 20,515 support level having marked the bottom of any selling in the first two weeks of April so far. A break and an hourly close below that level would bring problems for the index, pointing towards a possible sharp break lower.

But, as long as we see the price continue to respect the 20,515, there will be interest for some to buy around this level, given how consistent and precise it has been as a support level. Ultimately, the outlook for the day will be dictated by the reaction to 20,515 support. 

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