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Levels to watch: FTSE, DAX and Nasdaq

Sharp selling in the European and US indices brings about questions over a potential wider move lower. However, for the Nasdaq and DAX things still look bullish, with the FTSE leading the more bearish charge.

Data on screen
Source: Bloomberg

FTSE turning lower once more

The FTSE 100 is selling off sharply this morning, following on from the inability to break through 7556 on Tuesday. The consolidation seen yesterday and overnight formed a symmetrical triangle which has broken to the downside. Further losses seem likely, yet it would make sense to await a retracement or continuation pattern to enable better risk profile to any trade.

The fact that we turned lower from below the 7556 mark earlier in the week points towards the potential for this sell-off to fall back below the 7381 mark in a continuation of this recent weakness.

DAX falling into Fibonacci and trendline support

The DAX is similarly selling off sharply this morning, after setting a new all-time high on Wednesday. On the four-hour chart it is clear that there are significant hurdles to overcome to the downside if we are to see a wider bearish outlook. So far we have seen the 76.4% Fibonacci support respected perfectly, highlighting an interesting area for longs should we get back there (12,725).

Ultimately we would need to break back below 12,665 to provide a bearish outlook, which allows us the possibility of a bounce from trendline or Fibonacci support. Considering the higher high posted earlier in the week, it is seems likely that this sell-off is a buying opportunity rather than something to worry about — for now.

Nasdaq falls into Fibonacci level

The Nasdaq 100 has pulled back sharply into the 76.4% retracement this morning, following a period of strength in the early part of the week. The question from here is whether that rally is the beginning of the recovery for the Nasdaq. A break below 5637 would bring us back into the wider 76.4% retracement, but would also show that the sell-off is not over. Ultimately the wider uptrend would only be negated with a break below 5547.

There is obviously no guarantee that we have seen the end of this pullback, even if it is just a short-term thing rather than a wider move. However, with a 3/1 trade from current levels for a move back into 5779 vs a break below 5637, there is reason to be interested in longs around this level. 

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