Levels to watch: FTSE 100, DAX and Dow

European and US markets are drifting lower. However, with recovery stories building, there is a good chance we will see the bulls come back in before long.

Morning FTSE 100 rally fades amid GBP volatility

A bullish start to trade today for the FTSE 100 has faded amid a sterling rebound on rumours that Article 50 could be reversed unilaterally. That being said, we have been seeing a period of strength over the past two weeks, and there is a strong chance we will see further upside in the near future.

As such, this current weakness looks likely to be a short-term phenomenon before we see a move higher. A break below 6959 would be required to negate that bullish outlook. Be aware, this market is likely to be highly volatile and predictable given the often conflicting and unpredictable news relating to Brexit.

DAX pullback likely to be short-term in nature

The DAX has been pulling back throughout the start of the week, with the price respecting trendline and the 200-day simple moving average (SMA) support this morning.

The recent rebound comes from a long-term uptrend, raising the chance that we will see the beginning of a wider recovery from here. Thus, there is a strong chance we will see another leg higher before long. With that in mind, watch for a bullish turnaround in the near future, with a break below 11,208 required to negate this bullish outlook.

Dow retracement provides buying opportunity

The Dow Jones has been drifting lower in early trade this week, with the index closing the gap created over the weekend.

This points towards a potential bullish reversal from here on in as the index continues the gains seen over the past two weeks. As such, a bullish outlook remains in play unless we see a break below the 25,205 level.

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