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Levels to watch: FTSE 100, DAX and Dow

European indices are approaching a key breakdown level, below which we are likely to see substantial further downside.

FTSE 100 looks likely to break lower

The FTSE 100 is continuing its declines from the recent rally, with the price turning back towards key support this morning.

The wider trend over the past month has seen wide swings in each direction, and thus there is a strong likeliness we will sell off yet again to continue this wider consolidation pattern. Watch for an hourly close below 7706 to provide a bearish outlook for the coming trading days.

DAX breaking below trendline support

The DAX is also turning lower, with the price falling below trendline support.

This heightens the chances of a sharp deterioration in the near future, with a break below 12,535 and 12,493 crucial to sparking that next move lower.

Dow weakening in retracement mode

The Dow Jones is similarly weakening, yet with a clear uptrend remaining in play, there is still a question mark over whether this is simply a retracement of the rally from 25,114 or something bigger.

For this to turn into a wider bearish view, we would need to break below 25,114. Until then, this weakness looks likely to be short-term in nature. 

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