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Levels to watch: FTSE, DAX and Dow

Monday’s rout left indices at the mercy of the bears, but for now the downside momentum seems to have stalled.

All trading involves risk. Losses can exceed deposits.
Trader looking at data boards
Source: Bloomberg

FTSE 100 looks higher – at least, in the short-term
After such a selloff yesterday, the expectation is that we have a drift higher, at least in the short-term. Intraday charts are flashing oversold readings, so with the FTSE we may see a push back towards the August low of 5768, at which point the sellers may take over again.

The move may go as far as 5794, the 50-hour simple moving average, but for the time being any move by momentum indicators such as stochastics into overbought territory on the hourly/two-hourly chart should be seen as another sell signal. A fresh move below the overnight lows around 5660 targets 5605 in the first instance.

DAX just about clambers off its lows
Here too the index is clambering off the lows, but with little apparent enthusiasm. Some brave types might point to the 9000 area as a key support zone from August 2014, but for the moment that seems mostly like curve-fitting.

Nonetheless, it is useful to note that we could see a move all the way back to 9350 before the hourly downtrend line is hit, although it is likely that buying momentum will fade out around 9240. A move below 8900 opens the way to 8822 and then 8663. 

Dow Jones is still fighting
The index continues to fight hard for 16,000. Some resistance is possible around 16,075, the highs of late yesterday evening and also a support level from 3 February.

A turn lower would target the 15,900 area, then 15,800, and below this the way is open to the January lows around 15,500. 

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