Levels to watch: FTSE 100, DAX and Dow

Both the FTSE 100 and Dow look set for further downside after recent 76.4% retracements. Meanwhile, the DAX has broken trendline support and could join the bearish chorus.

FTSE 100 turning lower after deep retracement

The FTSE 100 is selling off from the 76.4% retracement this morning, following a wide rebound through much of yesterday.

This points towards a likely continuation of that bearish theme, with a break below the 7621 low looking likely. A break through the top of this month-long range (7706) would negate this bearish short-term outlook.

DAX directional bias unclear

The DAX seems less clear-cut. On one side, we have seen a break below trendline support off the back of a 61.8% retracement seemingly building a bearish picture.

On the other side, the continued creation of higher highs and higher lows remains prevalent unless we break below the 12,390 swing low. Given the recent rebound, we can now look towards the 12,464 swing low as a determinant of whether we are seeing that bearish breakdown occurring.

Dow reversing from 76.4% rally

The Dow Jones rallied into the 76.4% retracement level overnight, following on from a moderate breakdown at the back-end of last week.

There is a good chance we could see further downside from here, with a move below 24,980 providing confirmation of another breakdown from here. A rally through 25,215 would negate this bearish short-term 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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