FTSE 100, DAX and Dow rebound unlikely to last

FTSE 100, DAX and Dow continue to gain ground, yet a bearish turn doesn’t seem too far away.

FTSE 100 regains ground after recent sell-off

The FTSE 100 has been attempting to recover lost ground following last weeks sharp sell-off which saw the index hit a low of 7003 on Thursday. Since then we have seen the index rise, with that intraday trend of higher highs and higher lows providing a consistent period of upside for the pair.

Watch for that trend to continue as a signal that we are going to see further upside. There is a good chance this is a retracement of the wider decline from 7441. However, with the price yet to reach the likes of the 61.8% or 76.4% Fibonacci levels, further upside seems likely for now, with a break below 7184 required to negate that short-term trend and resume the bearish trend evident on the wider timeframes.

DAX gradually on the rise

The DAX also fell sharply last week, with the index gradually regaining ground since.

The ability to continue forming higher lows is key here, with the improved German industrial production figure helping to push the index into a fleeting new high for the week. Ultimately, this rally does look like a retracement of the wider sell-off from 12,496, pointing towards a breakdown before long. However, that bearish picture only comes back into play in the event we see a break below the 12,072 swing low.

Dow stalling amid recent rebound

The Dow Jones is in a more advanced position in this recovery, with the index having passed through the 61.8% Fibonacci resistance level.

It is also the index which looks most at risk of a bearish turn in the coming days, with the failure to create a new high meaning that a break below the 26,421-26,450 zone could set us up for a period of downside for the pair. Such a move would provide us with an intraday head and shoulders formation, pointing towards a continuation of the bearish trade seen last week.

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