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FTSE 100, DAX and Dow on the slide

The FTSE 100, DAX and Dow all head lower, but will it be a retracement or a reversal?

FTSE 100 slides below key support

The FTSE 100 has been dropping sharply since Monday’s peak, with the index breaking below the 7594 support level. That points towards a wider selloff emerging, with the next key support level approaching at 7557.

This wider selloff could come into play to maintain a symmetrical triangle pattern that has been playing out over the months. However, we would need to see a break below 7473 to confirm such a selloff. Until then, watch out for how we respond to this support level.

DAX reversing after rally into trendline resistance

The DAX is also turning lower after a recent rally into resistance. That trendline looks to have capped upside for the time being, with the price heading back into Fibonacci support.

A break below the 13361 support level would bring about a wider bearish picture. However, we need to see whether the index breaks or respects these Fibonacci levels in the meanwhile to determine whether we are looking at a retracement or reversal.

Dow pullback likely to be fleeting

The Dow Jones is also on the slide, yet to a lesser degree. The outperformance of US markets should ensure that this pullback is relatively short term in nature.

As such, watch for further downside, yet it will likely provide us with a retracement and buying opportunity rather than a wider reversal signal.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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