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Levels to watch: FTSE, DAX and Dow

Selling is expected for the indices today despite the likeliness that this period of weakness will soon be reversed for the long-term uptrend to kick in once more.

IG Analyst

Publication date : 2017-07-06T09:28:25+0100

Wall Street

Source: Bloomberg

FTSE looking set to break lower

The FTSE is turning lower from trendline resistance this morning, in what looks like the beginning of the next leg lower for the index. With the price having broken through trendline support, the key here is whether we can see the 7335 support level breached. An hourly close below there would point towards a move back into 7294 support. This is dependent on the break of 7335, where the inability to do so could bring us back into the 7386 resistance, which has been respected throughout the week thus far.

However, given the triangle pattern in play, there is a strong chance we could be finally seeing the breakout for this market.

FTSE chart

FTSE chart

FTSE chart

DAX turning lower from key resistance

The DAX has been keenly respecting the 12,490 resistance level this week, with the market turning lower once more this morning. That level is important because it marked the neckline of a double top formation. Thus, the wider picture points towards another leg lower from here.

The shorter term picture is one of a bearish rising wedge formation, which indicates a likely break lower before long. An hourly close below 12,408 would provide a strong bearish signal. However, there is also a good option of looking for longs within this pattern on the expectation of a break lower.

DAX chart

DAX chart

DAX chart

Dow looks set to drift lower

The Dow Jones has weakened since Monday’s crucial break through 21,506 resistance. That move provided us with the notion that we are likely to soon break higher once more. With that in mind, the current move lower is perceived as a retracement of the rally from 21,196.

Given that we have not even reached the 50% pullback, we are likely to push lower further before the bulls come in again. As such, a bearish view is in place unless we break back through 21,512.

Dow Jones chart

Dow Jones chart

Dow Jones chart

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