Levels to watch: FTSE 100, DAX and Dow

Italian political instability is driving stocks lower, with European indices in particular suffering. Meanwhile, the Dow is trading back at a critical support level.

FTSE 100 continues to extend recent bearish break

The FTSE 100 remains on a downward path, following the recent break below trendline and horizontal support.

We have seen the price move below the short-term intraday support this morning, raising the chance that we could see the selling gather pace. As such, a bearish outlook remains in play unless we push through 7761.

DAX falls into SMA support

The DAX has dropped into a new three-week low this morning, following on from losses brought about yesterday.

With the price currently trading at the 200 simple moving average (SMA), there is a chance of some kind of rebound from here. However, with the price having broken below the 12,799 mark, there is a good chance that any such rebound would be a short-term phenomenon before we see the index turn lower once more. As such, a bearish outlook is in play unless we break above 13,038.

Dow moves back into crucial support level

The Dow Jones has sold into the 24,629 support level once again, marking the fifth time since breaking through that level less than three weeks ago.

Just like the previous four times, this is going to be a crucial hurdle to overcome, with a strong likeliness of a bullish bounce. However, should we finally see a break and close below 24,629 it would bring about a heightened chance of a strong move lower, with the 61.8% Fibonacci retracement some 500 points from the breakout point. In any case, the directional bias will be dictated by the ability or inability to break that critical 24,629 support level. 

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