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Levels to watch: FTSE 100, DAX and Dow

Hopes of a US-China trade breakthrough have been rebuffed, causing a short, sharp spike for global indices. Is this going to mark the beginning of a period of weakness for indices?

FTSE 100 briefly breaks crucial swing high

The FTSE 100 joined many of the world markets in rallying sharply this morning, after rumours of a breakthrough between the US and China hit Twitter. This has since been rebuffed, causing the FTSE to turn lower.

However, that rally through 7059 highlights a potential bullish breakout in the not-so-distant future. For now, we are heading back towards the 7002 region of support. A break below that level would bring about a bearish near-term view, with a retracement of the rally from 6911 coming into play.

DAX weakening from trendline resistance

The DAX also saw a fleeting rally this morning, with the index pushing into the 200-day simple moving average (SMA) on the four-hour chart.

However, with trendline resistance in play, there is a good chance we will see a downside come into play from here. A break through 11,568 would be required to bring about a more bullish, wider outlook. For now, it looks likely we will see the index start to deteriorate from this region of resistance.

Dow rebound comes under the spotlight

The Dow Jones has rallied towards a potential trendline (only two touches) this week, with the downtrend of late coming into question. To the downside, we have a critical support level in 24,120, which if broken would likely spark another strong leg lower for the market.

However, for now, it is worthwhile seeing how we follow up on the fleeting rally through 24,668 and whether we respect this potential trendline resistance.

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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.