Levels to watch: FTSE 100, DAX and Dow

Overnight weakness looks like it could be fleeting for the Dow and DAX, whereas the FTSE 100 is providing the lead lower amid a strengthening pound.

Market data
Source: Bloomberg

FTSE 100 plummets below key support level

The FTSE 100 has suffered at the hands of a stronger pound, as the repercussions of a rising inflation rate take its toll on the pound itself, and subsequently the FTSE 100. The break below 7357 brought about a bearish short-term outlook, with the index heading towards the lower end of its recent range. With that in mind, it makes sense to sell into rallies, with a break above 7403 needed to negate the bearish outlook. Watch out for trendline support to the downside, which coincides with wider 76.4% retracement.

Ultimately, we could be heading towards a move back into the lower end of the 7300-7460 range. Yet a break below 7319 would be required to negate the creation of higher lows.

DAX drifts into support level

The DAX has drifted into the 12,485 support level overnight, coming off the back of a sharp move higher in recent weeks. There is a good chance we could see the index move higher from here, with a break above 12,527 providing a bullish signal.

However, an hourly close below 12,485 would provide a case for further weakness over the short term. 

Dow pullback brings support into view

The Dow Jones has also moved lower overnight, with the 22,082 level crucial to the outlook for the short term. Given the clear uptrend in play here, the preference is for another move higher from here.

However, an hourly close below 22,082 would point towards a stronger possibility of further weakness over the short term. Until then, watch out for a bounce from here. 

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