FTSE 100, DAX and Dow rebound may be short-lived
FTSE 100, DAX and Dow regain ground, yet the recent bearish breakdowns point towards a possible bearish picture coming back into play.
FTSE 100 rebounds into 76.4% Fibonacci resistance
The FTSE 100 has seen sharp gains over the course of the past two trading days, with the index regaining much of the ground lost in the early part of the week. This has taken us into the 76.4% Fibonacci resistance level, which brings about a possibility that the index reverses lower from here.
Given the recent trend of lower highs and lows, it would come as no surprise to see the index reverse lower here. This bearish outlook holds unless we see a break above the 7405 resistance level. For a bearish confirmation signal, watch for the drop below 80 on the stochastic oscillator.
DAX rebounds, yet prior breakdown signals potential decline
The DAX also been on the rise, with the index trading back within its consolidation zone that was evident throughout mid-November.
However, the prior decline below 13,142 and 13,109 signals the possibility that this is a retracement before we turn lower once more. As such, watch for potential reversal signals from this recent retracement, with a break through 13,375 required to negate that bearish outlook.
Dow rebounds after recent pullback
The Dow Jones is also on the climb, following a recent decline into 27,672 support. The wider trend is overwhelmingly bullish, and thus a rally through 28,159 would bring a continuation signal.
Until then, it is worthwhile noting the current respect of the 61.8% Fibonacci resistance level. A break back below 80 in the stochastic could bring a bearish sell signal over the short term.
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