Indices decline, with wider bearish picture emerging

Recent losses point towards bearish trends remaining in play for European and US markets. Particular attention is placed on the Dow, with the US index trading at a critical head and shoulders neckline.

FTSE 100 declines back below key support

The FTSE 100 reversed sharply throughout the course of yesterday, with the index breaking below the 7211 level. That provides a lower low and confirms the recent rebound as a lower high.

Those factors add up to a picture which points towards a move back into the 7136-7145 zone of support. A break below that support zone would see a wider bearish picture coming into play for the following weeks. However, be aware that we could see some form of short-term rebound, yet only with a break above 7319 would we see a bullish picture come into play for the medium term.

DAX continues recent downtrend

The DAX has continued its recent downtrend, with the break below 11,924 creating yet another low for the index.

This move also sees the price breaking below the 76.4% Fibonacci retracement, signaling that this recent downtrend is likely to be a precursor to further downside rather than a retracement. Yes, we could see some form of rebound over the near term given the recent losses, yet a bearish picture remains in play unless we see a rise through 12,124 resistance.

Dow falls into critical support level

The Dow Jones has declined into the crucial 25,220 support level overnight, with the index briefly hitting the lowest level since February. A break below this level would complete a head and shoulders formation, raising the likeliness of another round of sharp losses for the index.

As such, watch for how the index responds from here, with the sharp declines at the start of the week raising the possibility of a retracement. Such a rebound would look like a precursor to further declines, with a bearish picture remaining in play unless we see a break through 25,716.

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 30
  • The only provider to offer 24-hour pricing

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Sell
Buy
Updated
Change

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
China 300
-
-
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.