Levels to watch: FTSE 100, DAX and S&P 500

Weakness looks to be the name of the game in early trade, with the FTSE 100, DAX and S&P 500 all turning lower. However, with key support levels to be broken, the confirmation is yet to occur.

US traders
Source: Bloomberg

FTSE 100 showing signs of weakness

The FTSE 100 has rolled over this morning, following on from a repeated failure to break through the 7553 resistance level in a meaningful manner. This has brought us into a potential head and shoulders pattern, with a neckline at 7519.

Should we see an hourly close below that level, we could see the index move lower from here. The flip side would be a break up through the overnight highs of 7542, which would point towards another potential challenge of the 7553 resistance.

DAX breaking below trendline support

The DAX is attempting to break below trendline support this morning, following on from a failed attempt to break into new highs both yesterday and today. The key here is whether we see the DAX break below 12,977 support. An hourly close below that point would likely spark a significant sell-off for the index, with the recent swing highs coming into play as near-term support.

Conversely, a failure to break below 12,977, followed by an hourly close back above 13,009, would negate the possibility of a bearish move for the index.

S&P 500 falling back within wedge formation

The S&P 500 is turning lower this morning, following a rally into trendline support. The overall rising wedge formation is a bearish one, which points towards the potential for a bearish breakdown before long.

For that to come to fruition, we would need to see an hourly close below 2552. Until then, short-term downside looks likely, if only to continue trading within this pattern.

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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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