Levels to watch: FTSE 100, DAX and Dow

Indices turn lower yet again, with the 61.8% resistance forcing the FTSE 100, DAX and Dow lower. Could this be the beginning of the next leg lower for European and US markets?

FTSE 100 heading back towards key Fibonacci resistance

The FTSE 100 has been attempting to regain ground overnight, following a move lower from the 61.8% retracement. There is a strong chance that we are seeing a retracement of the 7796-7543 sell-off, thus highlighting the importance of the 61.8% (7699) and 76.4% (7736) retracements.

With that in mind, the strength we are seeing this morning looks likely to reflect either an attempt to move into the 76.4% retracement, or else a short-term bounce before we continue the weakness seen yesterday.  A break below 7622 would provide confirmation of a bearish shift, while a rally into the 7736 level would look likely a good shorting opportunity.

DAX breaking below trendline support

The DAX has seemingly stalled at the 61.8% retracement, with the failed attempt to rally through Wednesday’s high leading the index to a break below trendline support.

This points towards a possible bearish shift for the index, with the wider bearish view coming into play with a break below the 12,669 swing-low. Conversely, a rally through 12,863 would be required to negate this bearish outlook.

Dow continues to falter after brief bounce

The Dow Jones has been similarly faltering at the 61.8% retracement, set within a wider downturn for the index. With the price once again turning lower this morning, there is a good chance that we could see the sellers return in force once again.

A break below the 24,628 swing-low would provide a bearish signal, with a break back below 24,558 likely to continue the recent downtrend. A rally through the 25,008 level would be required to negate this bearish outlook.

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