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FTSE 100, DAX and Dow regain ground after sharp declines

​FTSE 100, DAX and Dow attempts to regain ground after sharp declines, yet virus fears could bring further downside.

FTSE 100 starts to regain ground after recent declines

The FTSE 100 has managed to regain some ground this morning, coming off the back of a period of consolidation through much of yesterday. The sharp decline seen after the weekend does point towards further downside, although there is a sense of calm growing despite a rise in virus cases in China overnight.

A rise through the 7642 swing high would bring about a more bullish outlook for the pair, yet another leg lower looks likely until that happens. Such a decline would see us move back towards the trendline support that underpins the symmetrical triangle formation that has been in play over the past year.

DAX rising after sharp drop into Fibonacci support

The DAX also saw huge losses yesterday, with the German index dropping into the 61.8% Fibonacci support level last night. The wider trend remains bullish, yet there is a distinct possibility of another bearish leg lower coming into play before long.

Nevertheless, with the index turning higher despite the news of a coronavirus case in Germany, there is a good chance we will see further upside for the short term. From there, it looks likely we will see another leg lower, with a break through 12,601 required to negate the current bearish outlook.

Dow Jones turning higher from deep pullback

The Dow Jones is similarly regaining ground following a deep retracement, with the price having moved within touching distance of the 76.4% Fibonacci retracement level. A break through 29,282 would point towards a continuation of the wider uptrend, yet it is likely that the gains we are currently seeing are a precursor to further weakness.

As such, while we could see further short-term gains, it makes sense to look for intraday signals of a potential bearish turn if this virus is not brought under control.

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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