FTSE 100, DAX and Dow slump after recent gains
FTSE 100, DAX and Dow break sharply lower, yet wider trend could point towards a swift recovery.
FTSE 100 drops into deep retracement area
The FTSE 100 has continued its decline from 7441, with the head and shoulders around that level providing a key reversal signal.
However, that could simply be a short-term move, with the wider picture pointing towards a strong possibility that this is a retracement before we move higher once more. With that in mind, watch out for whether we move higher from this 76.4% Fibonacci support at 7255. A rise through the overnight consolidation top of 7307 would add greater confidence to the notion of an impending bullish reversal. Conversely, should we decline below Fibonacci support, the crucial level to watch is 7196 which would signal a wider bearish picture if broken.
DAX fake-out leads to sharp decline
The DAX appeared to be breaking higher yesterday, with the price rising through 13,310 resistance. That signaled a likely bullish breakout after recent consolidation. However, with the price failing to close above that level and breaking lower, it seems that move was a fake-out.
The sharp decline has taken the index below 13,137 and 13,040 support, bringing about a heightened chance of a more protracted breakdown. With that in mind, while we are regaining ground, there is a good chance that this move is a precursor to further downside.
Dow declines into Fibonacci support
The Dow Jones has seen a similar sharp decline, with the index dropping sharply into the 76.4% Fibonacci support level.
Whether or not the price holds up at this support level will be crucial for the ongoing outlook. As such, while this could be a reversal point for the index, a break below 27,800 and 27,675 would bring a wider bearish picture into play.
IGA, may distribute information/research produced by its respective foreign affiliates 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.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. 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, and 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.
Please see important Research Disclaimer.
Take a position on indices
Deal on the world’s major stock indices today.
- Trade the lowest Wall Street spreads on the market
- 1-point spread on the FTSE 100 and Germany 40
- The only provider to offer 24-hour pricing
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.