DAX drops below key support
The DAX has dropped below the 12,463 support level, completing a double top formation off the back of a month-long rally.
This rally faltered at the crucial 12,611 resistance level (late-February peak), and the fact we have a reversal pattern in play at that level points towards a potentially bearish shift from here. While the price is attempting to regain ground, there is a good chance that we have seen the beginning of a bearish phase, and as such it makes sense to look for further downside on such a near-term rally. A break above 12,640 would be required to negate this bearish short-term view.
Dow tumbles into deep retracement
The Dow Jones sold off sharply yesterday, with the initial rebound seen in the morning giving way to a drop below the crucial 24,327 swing low.
There is a good chance we are seeing a short-term retracement, which points towards a recovery from the 23,701-23,922 support zone. However, with the wider downtrend still in play, the worry is that we could still see a break below 23,343 to continue that trend. With a whole host of earnings figures due out today, much will be impacted by the fundamental picture. However, for now, there is still a strong risk of further losses, where any longs would be preferred at the 76.4% (23,701) retracement owing to risk-reward benefits.