Levels to watch: FTSE 100, DAX and Dow

European indices are approaching a key breakdown level, below which we are likely to see substantial further downside.

FTSE 100 looks likely to break lower

The FTSE 100 is continuing its declines from the recent rally, with the price turning back towards key support this morning.

The wider trend over the past month has seen wide swings in each direction, and thus there is a strong likeliness we will sell off yet again to continue this wider consolidation pattern. Watch for an hourly close below 7706 to provide a bearish outlook for the coming trading days.

DAX breaking below trendline support

The DAX is also turning lower, with the price falling below trendline support.

This heightens the chances of a sharp deterioration in the near future, with a break below 12,535 and 12,493 crucial to sparking that next move lower.

Dow weakening in retracement mode

The Dow Jones is similarly weakening, yet with a clear uptrend remaining in play, there is still a question mark over whether this is simply a retracement of the rally from 25,114 or something bigger.

For this to turn into a wider bearish view, we would need to break below 25,114. Until then, this weakness looks likely to be short-term in nature. 

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.