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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?

IG Analyst

Publication date : 2018-02-06T09:27:43+0000

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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.

FTSE 100 chart

FTSE 100 chart

FTSE 100 chart

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.

DAX chart

DAX chart

DAX chart

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.

Dow Jones chart

Dow Jones chart

Dow Jones chart

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