Levels to watch: FTSE 100, DAX and Dow

After an overnight recovery, the sellers have taken control of markets once again, with significant declines seen across Europe.

FTSE 100 tests two-year lows

The FTSE 100 has dropped back to support around 6840, with a swift drop last night taking it to 6768.

It has rallied from this low, but any bounce is likely to run into resistance around 6870. Below 6840 the price heads towards 6640 and then 6519. A bullish view would require a move above 6920, which might suggest a push back to 7100 is in the offing.

DAX goes into reverse

The overnight bounce is being erased, as the DAX tests the area below the long-term trendline support zone at 11,040.

Below last night’s low of 10,945, the price will test possible support around 10,825.

Dow poised for further losses

US cash markets reopen today, and the overall bearish view remains in place. Below 24,500, the Dow Jones will test the 24,265 area that marked the low in October and November.

A recovery back above 25,153 would see it reclaim the 200-day simple moving average (SMA), providing a more bullish view. Below 24,265 the price will head towards 23,830.

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