Levels to watch: FTSE 100, DAX and Dow

Indices turn lower yet again, with the 61.8% resistance forcing the FTSE 100, DAX and Dow lower. Could this be the beginning of the next leg lower for European and US markets?

FTSE 100 heading back towards key Fibonacci resistance

The FTSE 100 has been attempting to regain ground overnight, following a move lower from the 61.8% retracement. There is a strong chance that we are seeing a retracement of the 7796-7543 sell-off, thus highlighting the importance of the 61.8% (7699) and 76.4% (7736) retracements.

With that in mind, the strength we are seeing this morning looks likely to reflect either an attempt to move into the 76.4% retracement, or else a short-term bounce before we continue the weakness seen yesterday.  A break below 7622 would provide confirmation of a bearish shift, while a rally into the 7736 level would look likely a good shorting opportunity.

DAX breaking below trendline support

The DAX has seemingly stalled at the 61.8% retracement, with the failed attempt to rally through Wednesday’s high leading the index to a break below trendline support.

This points towards a possible bearish shift for the index, with the wider bearish view coming into play with a break below the 12,669 swing-low. Conversely, a rally through 12,863 would be required to negate this bearish outlook.

Dow continues to falter after brief bounce

The Dow Jones has been similarly faltering at the 61.8% retracement, set within a wider downturn for the index. With the price once again turning lower this morning, there is a good chance that we could see the sellers return in force once again.

A break below the 24,628 swing-low would provide a bearish signal, with a break back below 24,558 likely to continue the recent downtrend. A rally through the 25,008 level would be required to negate this bearish outlook.

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.

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