Levels to watch: FTSE 100, DAX and Dow

The FTSE 100 is the big underperformer, with a sharp rise in the pound hurting the index. Meanwhile, gains for the DAX and Dow seem likely, despite the bearish wedge forming in the latter.

FTSE 100 falls back into the 76.4% Fibonacci retracement

The FTSE 100 managed to continue the creation of intraday lower highs and lower lows, with the index heading sharply lower in response to a bullish break for sterling.

Whether or not we hold up here will certainly be of interest, with a break below this Fibonacci level pointing towards a likely move into the 7064 swing low, where a break below that level would allude to a wider pullback coming into play. Thus, watch for a potential rally to continue this trend of lower highs and lower lows, with a break below Fibonacci and horizontal support proving key to maintaining the downward trajectory.

DAX turning higher from Fibonacci support

The DAX is clearly outperforming the FTSE 100, with the market looking set for another push higher after an overnight retracement into the 76.4% Fibonacci level (11,426).

Interestingly, what provides us with greater confidence of an upward move from here is that we would need a break below 11,389 to negate the bullish outlook. That level represents the major peak from 5 February. Thus, unless that level is broken, a bullish short-term outlook remains in play.

Dow starts to gain ground from trendline support

The Dow Jones has pulled back into trendline support overnight, with the index trading within a bearish rising wedge formation.

The fact is that while we are trading within a bearish pattern, we are yet to see something that tells us a breakdown is impending. Thus, another leg higher looks likely for now, with a break below 25,763 required to negate the uptrend in play since December.

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