Levels to watch: FTSE 100, DAX and Dow

The sell-off seems to have abated for now, with European and US market recovering after another strong leg lower. However, could this simply be another short-term retracement?

FTSE 100 breaks below crucial support level

The FTSE 100 managed to break below the crucial 7279 support level yesterday, negating the wider creation of higher lows. This creates a scenario where further losses wouldn’t be a surprise, with the current bounce potentially forming another retracement before we sell-off once more.

Whether that is the case remains to be seen. However, for the time being, we are seeing a clear move towards the 61.8% retracement. Beyond that, we have the 76.4% at yesterday’s crucial 7279 support level. While we could see further short-term upside, we would need to break above 7391 to bring about a confident view that the FTSE 100 is moving into a more bullish phase.

DAX rallies past 61.8% retracement

The DAX is also in recovery mode, with the index pushing past the 61.8% level in the wake of yesterday’s almighty sell-off.

In a similar manner to the FTSE 100, we need a break through the recent swing high to begin turning the corner, with the 12,754 level representing that pivotal point. Until that occurs, there is still a chance we are in retracement mode, priming ourselves for another leg lower.

Dow pushing higher after sell-off

The Dow Jones is also moving higher, following yesterday’s sell-off, with the price pushing towards the near-term 24,258 resistance.

This index could still have a significant way to retrace upwards to make a dent on the move lower from the 25,515 swing low. As such, a short-term bounce, with the potential of a wider recovery is expected, with shorter-term intraday charts becoming more useful to gauge whether this current rally is set to persist.

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