FTSE 100, DAX and Dow rebound, yet risks remain

FTSE 100, DAX and Dow rebound, but risks remain given the existence of resistance up ahead.

FTSE 100 rebounds from trendline support

The FTSE 100 has managed to rebound from trendline support once more, following a decline into the confluence with the 76.4% Fibonacci retracement level at 6082. Much like the Fibonacci pullback seen towards the end of June, the subsequent rally has thus far failed to rebound into a fresh high.

Instead we are seeing the price rise towards trendline resistance, with the price already starting to lose momentum. With that in mind, we are trading within a symmetrical triangle which points towards continued consolidation until we see a breakout from the pattern. That means a potential downturn over the short term, with a break through either 6264, or 6026 required to signal an exit from this tringle pattern.

DAX rally likely to come under pressure

The DAX has similarly managed to regain ground in early trade, with the index breaking back into the top end of a rising wedge formation.

That brings about a possibility that we will turn lower once again to continue the wider trend of lower highs seen since the June peak of 12,938. A break through the 12,617 level would be required to negate the recent trend of lower highs. Until then, there is a risk that this mornings rally falters once again.

Dow Jones consolidates above SMA support

The Dow has been trading above the 200-day simple moving average (SMA) over recent days, with the previous trendline seen in May and June also coming back into play. The index is on the rise once again this morning as the market continues to track that confluence of trendline and SMA support.

With trendline and Fibonacci resistance up ahead, there is a chance we could see another slump before long, with a break through 26,423 ultimately required to bring about a wider bullish theme into play. Until then, the short-term gains could be capped once more if we see a breakdown below this confluence of SMA and trendline support. For now, the grind higher continues for the Dow.

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