Levels to watch: FTSE, DAX and Dow

European markets are recovering slightly today after heavy losses, but the bearish outlook seems to be intact.

German Stock Exchange
Source: Bloomberg

FTSE 100 eyes 100-day SMA

All eyes remain on the 7130 level, which was breached yesterday. The index is now attempting to recover the level and move above it, but with support now set as resistance it may prove difficult.

A further drop would head towards 7060 and then down to the 100-day simple moving average (SMA) at 6972. Any rally needs to clear 7170 to indicate that the buyers are firmly in charge.

DAX could test 11,200

Having fallen some 2% from its peak, the index may be poised for a small rebound, but it will need to post a daily close back above 11,800 to restore the uptrend.

A continuation of the downward move off the highs of last week would see 11,400 tested, and potentially as far as 11,200. 

Dow Jones could test 20,000

US markets were heavily oversold yesterday, so a bigger recovery could be in the offing for the index. Yesterday’s bounce took the price back to 19,972, so this is the first area to watch, with a move back above here leading to a test of previous resistance at 20,000.

A further drop will bring 19,578 and 19,423 into play. 

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