Levels to watch: FTSE 100, DAX and Dow

European and US indices are pulling back in early trade. However, with recent upside breaks, these moves look likely to provide a short-term retracement before we move higher once more.

FTSE 100 pullback likely to provide buying opportunity

Yesterday saw the FTSE 100 rally through the peaks set throughout the past month, bringing the price within touching distance of the crucial 7796 resistance level.

This points towards the gradual ascent seen over the past week as being something which will likely resolve with a break through 7796 rather than a breakdown. With the price falling sharply this morning, there is a good chance that we are seeing yet another retracement before we push higher once more. With that in mind, it makes sense to look for long positions from Fibonacci support, with the 61.8% (7701) and 76.4% (7682) the levels worth watching. A break below 7651 would negate this bullish outlook.

DAX continues to consolidate following recent gains

The DAX is moving lower this morning, set within a period of consolidation that has been playing out over the past three trading days.

With the rally through 12,849 earlier in the week, there is a chance that this current pullback is a retracement of the 12,737-12,863 rally. With that in mind, look for potential support at the 76.4% retracement (12,767). A break and hourly close below 12,737 would signify a likely next leg lower for the DAX.

Dow weakness unlikely to last

The Dow Jones is turning lower, with the market looking to build on overnight losses.

The rally through 25,496 looks to pave the way for a recovery following recent declines, yet with the price turning lower, we could see a deeper retracement into the 76.4% level at 25,342 first. A break below 25,288 would signal a wider period of downside. Until then, further downside would look like a short-term phenomenon before we push higher once more. 

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