Levels to watch: FTSE 100, DAX and Dow

Global indices look exposed as recent declines take us towards crucial levels of support. Should they break, we could be heading for another round of heavy selling.

FTSE 100 declines towards critical support level

The FTSE 100 has continued its recent decline, with the index heading towards the crucial 7268 support level. The recent rally fell short below the 61.8% and 200-day simple moving average (SMA) confluence of resistance, with the price failing on three occasions around the 7371 level. That failure to create new highs points towards the bearish picture potential re-emerging.

From a wider perspective, the break below 7145 signalled that we are likely to be looking at an upwards retracement before we turn lower once more. Given that a double top would come with a break below 7268, watch for whether we can break that support level to bring about a picture of further losses. Bear in mind that such declines would be likely to take us towards the 7145 region, below which we would complete a head and shoulders formation on the daily time frame.

FTSE 100 chart Source: ProRealTime

FTSE 100 chart Source: ProRealTime

DAX breaking lower after volatile week

The DAX is similarly turning lower, with the index moving within touching distance of the key 11,991 support level.

A break below that swing low would carry bearish consequences, confirming the recent 12,214 peak as a lower high, while also providing a lower low. Given the recent rally came into the wider 76.4% retracement at 12,310, it looks like we are seeing that wider bearish picture take hold once more, with a break back towards 11,814 likely if 11,991 is taken out.

DAX chart Source: ProRealTime

DAX chart Source: ProRealTime

Dow bulls looking exposed as we approach key support

The Dow Jones has also broken towards a key support level this morning, with the price moving towards the 25,556 low from Monday.

With the recent recovery failing to move higher than the 25,957, it looks likely we will see the index tumble further should this support level be overcome. As such, forthcoming price action will be significantly impacted by the reaction to this 25,556 low.

Dow chart Source: ProRealTime

Dow chart Source: ProRealTime


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