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Levels to watch: FTSE 100, DAX and Dow

European and US indices have been drifting lower, yet with an uptrend in play, a bullish rebound looks likely.

FTSE 100 pauses within recent uptrend

The FTSE 100 has seen an incredible period of gains of late, with the index hitting the highest level in three months.

With the price having drifted lower yesterday, we have been in consolidation mode. This could build into a larger retracement, yet it could also simply be a very minor pullback within an uptrend. The key to understanding what is occurring is seeing whether the price rallies through the prior peak of 7186. If we see an hourly close above that level, it will likely provide a clue that the retracement is over and we are about to head onto the next leg higher. Until then, further downside remains a risk.

DAX pullback to bring buying opportunity

The DAX continues to drift lower, following a rally into a nice confluence of trendlines. This is bringing us into a key area of support, with a wider trendline of support coupled with Fibonacci retracements.

Ultimately, we need to see the index turn higher before long or else it will negate this recent uptrend. As such, watch for a potential bullish reversal, with a break below 11,098 and in particular 11,047 required to bring about a more bearish outlook.

Dow falls into trendline support

The Dow Jones has declined into the lower trendline of its recent rising wedge formation, with the index starting to find some stabilisation once more.

The ability to turn higher from here is going to be key in continuing the recent intraday uptrend, with a break below 24,835 signalling the start of a more bearish phase.

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