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Levels to watch: FTSE 100, DAX and Dow

Weakness across the board for global indices sees the FTSE 100, DAX and Dow all moving lower. However, is this setting us up for a good buying opportunity?

All trading involves risk. Losses can exceed deposits.

FTSE 100 showing signs of potential impending sell-off

The FTSE 100 has been gradually gaining ground over the past three weeks, following a sharp sell-off in late May. However, that gradual ascent has been broken with the move below 7638 on Friday.

For the near-term that means a likely challenge of the 7553-7600 support zone once more. However, it is likely that this is the beginning of a stronger move lower for the index. As such, look out for how the index responds to that support zone, with a break below 7553 pointing towards a retracement of the wider 6841-7903 rally.

DAX falling sharply after recent gains

The DAX is in retracement mode, following a sharp move higher through the second half of last week. This weakness looks like a short-term retracement before we push higher once more.

However, it is difficult to ascertain whether we are retracing the near-term rally from 12,779, or the wider move from 12,546. For the near-term option, look for potential support around 12,875. Yet the wider move points towards support around the 12,788 and 12,695 marks. The wider retracement is less likely to be hit, yet holds less risk of a deeper breakdown. Ultimately, a break below 12,544 would be required to negate the bullish outlook for the DAX.

Dow turning lower after recent breakdown

The Dow Jones fell below the crucial 25,075 swing low last week, following up on a trendline break which pointed towards a heightened possibility of a wider pullback.

That break below 25,075 points towards further downside being likely from here, with the index looking to retrace the wider rally from 24,248. As such, look for further downside, with the Fibonacci retracements at 24,690 and 24,521 providing potential buying opportunities. Conversely, a rally through the near-term swing high at 25,139 would bring about an earlier bullish outlook.

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