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Levels to watch: FTSE 100, DAX and Dow

Another leg lower for indices points towards further selling to come, with key support levels being challenged this morning.

FTSE 100 rally falls short

The FTSE 100 managed to rally out of a symmetrical triangle formation yesterday, yet the subsequent move turned out to simply be a deep retracement, as the index continues its decline after rejecting the 7312 resistance level.

The overnight move below 7201 points towards further downside to come, with any near-term upside likely to provide a shorting opportunity, as long as the price does not break above yesterday’s peak of 7292.

DAX challenging key support level

The DAX is also selling off, with the price breaking below the crucial 12,332 support level this morning. An hourly close below there would point towards further downside for the days ahead.

The failure to create a new high points towards a head and shoulders formation being completed, which again points towards a bearish outlook going forward. A break above 12,513 would be required to negate that outlook.

Dow rally fades into sharp downturn

Yesterday’s sharp rally soon faded into significant downside for the Dow Jones, with the index breaking below the key 24,805 support level.

The steepness of yesterday’s sell-off makes it difficult to utilise the prior swing high for risk-to-reward purposes, yet retracements and bearish continuation patterns are worth watching for as potential shorting opportunities. A bearish outlook remains unless we break above 25,298.

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