CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Levels to watch: FTSE 100, DAX and Dow

The sell-off seems to have abated for now, with European and US market recovering after another strong leg lower. However, could this simply be another short-term retracement?

anonymous

Publication date : 2018-02-06T09:27:43+0000

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FTSE 100 breaks below crucial support level

The FTSE 100 managed to break below the crucial 7279 support level yesterday, negating the wider creation of higher lows. This creates a scenario where further losses wouldn’t be a surprise, with the current bounce potentially forming another retracement before we sell-off once more.

Whether that is the case remains to be seen. However, for the time being, we are seeing a clear move towards the 61.8% retracement. Beyond that, we have the 76.4% at yesterday’s crucial 7279 support level. While we could see further short-term upside, we would need to break above 7391 to bring about a confident view that the FTSE 100 is moving into a more bullish phase.

FTSE 100 chart

FTSE 100 chart

FTSE 100 chart

DAX rallies past 61.8% retracement

The DAX is also in recovery mode, with the index pushing past the 61.8% level in the wake of yesterday’s almighty sell-off.

In a similar manner to the FTSE 100, we need a break through the recent swing high to begin turning the corner, with the 12,754 level representing that pivotal point. Until that occurs, there is still a chance we are in retracement mode, priming ourselves for another leg lower.

DAX chart

DAX chart

DAX chart

Dow pushing higher after sell-off

The Dow Jones is also moving higher, following yesterday’s sell-off, with the price pushing towards the near-term 24,258 resistance.

This index could still have a significant way to retrace upwards to make a dent on the move lower from the 25,515 swing low. As such, a short-term bounce, with the potential of a wider recovery is expected, with shorter-term intraday charts becoming more useful to gauge whether this current rally is set to persist.

Dow Jones chart

Dow Jones chart

Dow Jones chart

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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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