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FTSE 100, DAX and Dow pause after sharp declines

FTSE 100, DAX, and Dow is taking a breather following huge declines. With the Dow at Fibonacci support, US indices have the potential to outperform their European counterparts.

FTSE 100 declines back into critical support

The FTSE 100 has slumped back into the 7078 support level, representing the lows from June and August.

Should we see a break below this 7064-7078 zone, it would bring about greater confidence of a downturn. As such, the outlook will be dictated by the ability or inability to break through that support zone.

DAX pauses after sharp decline

The DAX has also turned lower over the course of the week. While the index has not quite managed to return into the lows of last week, there is a strong chance we will see further downside to continue the trend of lower highs and lows.

With the price initially respecting the 61.8% retracement level of 11,540 on the way down, we are now seeing that prior low provide resistance on the way up. A break through 11,864 would bring a more bullish picture into view, yet a bearish picture remains in play until that happens.

Dow finds support on Fibonacci support

The Dow Jones has also managed to arrest the declines following a huge sell-off over the course of yesterday's session. Unlike the FTSE 100 and DAX, this market remains within an uptrend, and the fact that we are seeing Fibonacci support attests to that fact.

Whether or not we break below that 25,394 support level will be key in determining the outlook from here on. Should we break that level, then it would greatly increase the likeliness of a move back below 25,075 and on towards the critical 24,603 June low. However, for now the 25,394 level is the key hurdle to overcome for bears.

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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