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Levels to watch: FTSE 100, DAX and Dow

Short-term upside for stocks looks like a potential shorting opportunity, given the recent decline across worldwide indices.

All trading involves risk. Losses can exceed deposits.

FTSE 100 consolidation expected to lead to further downside

The FTSE 100 has been consolidating since the early losses exhibited yesterday. With the price moving into a previously notable region of resistance, we could see some support come into play.

Despite this, a bearish outlook remains valid, with further downside looking likely from here. The middle Bollinger band has provided reliable resistance within this recent downturn, and thus it makes sense to expect the same on this occasion. Thus a move lower seems imminent. This bearish view remains as long as we are trading below 7761.

DAX rally unlikely to last

The DAX has also seen some overnight gains following the sharp deterioration around the open yesterday. However, with the price having moved into the 76.4% retracement, there is a good chance we could see another move lower before long.

The first hurdle needed to overcome in a bid to push out of this bearish outlook would be a rally above 12,749, followed by 12,861. Until then a move lower looks likely before long.

Dow rebounds, yet this respite could be fleeting

The Dow Jones has been rebounding in the wake of Tuesday’s sharp deterioration. This looks to be a retracement of a wider 23,531-25,083 rally, pointing towards further downside.

With the 61.8% Fibonacci placed at 2414, another leg lower looks likely. With that in mind, this rally looks like a short-term phenomenon before we move lower once more. As such, a bearish outlook remains in play unless we break above 24,638. 

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