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Levels to watch: FTSE 100, DAX and Dow

The FTSE 100 looks set for further downside, while the DAX and Dow are likely to leave the overnight weakness behind, with another leg higher.

IG Analyst

Publication date : 2018-01-24T09:24:59+0000

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FTSE 100 breaking into another bearish phase

The FTSE 100 has been trading within an ascending triangle formation over recent days. However, with the price falling below the 7711 swing low, we appear to be seeing the beginning of another leg lower for the index.

Greater confidence in this notion would be gained should the price break 7684, yet for now we are seeing the tentative first bearish signs. Watch for an hourly close below 7711 as a bearish signal, where the price would have to break up above 7747 to return a more positive outlook.

FTSE 100 chart

FTSE 100 chart

FTSE 100 chart

DAX consolidating after recent run

The DAX has been on a strong run of late, with the price trading in a symmetrical triangle formation off the back of an incredible bullish trend.

We have seen a 38.2% pullback thus far, with any further short-term weakness looking like a deeper retracement before we see the price move higher once again. With that in mind, whether we see a deeper retracement or not, it is likely that we will see the price turn higher soon enough to continue this trend.

DAX chart

DAX chart

DAX chart

Dow turning higher from 50% retracement

The Dow Jones is pushing higher once again, coming off the back of a 50% retracement on Tuesday.

This is just the latest in a long line of retracements, each of which typically resolves with a strong move higher for the index. We are trading within a bearish rising wedge formation, which could point towards an eventual breakdown for the index. However, for now, we expect further upside to come, with a break below 25,971 required to negate the bullish outlook.

Dow Jones chart

Dow Jones chart

Dow Jones chart

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