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

It has been a tough week so far for indices, but while the short-term outlook is bearish the longer-term rebound remains intact.

FTSE 100 remains under pressure

The pullback continues here, with the FTSE 100 now below the 50-day simple moving average (SMA) for the first time since the end of January.

Possible areas of near-term support come in at 7190 and 7150, then on down to 7080 and 7040. The index has seen a series of lower highs over the past two weeks, and breaking these will require, in the first instance, a rally above 7370. Until then, near-term declines seem likely.

DAX edges back from year-to-date peak

Friday’s peak proved to be the high water mark for DAX now, but the uptrend here is still solidly in place.

The 50-day SMA, 11,860, and then 11,800 are areas to look for possible support in the near term, while further declines target 11,704 and 11,400. As the sequence of higher lows on the daily chart is still intact, we look at this pullback as a buying opportunity once a new higher low has been established, with the bullish view only fading if the index drops below 11,800.

S&P 500 bears rule intraday

At present it is clear that the S&P 500 cannot hold on to intraday rallies. However, this pullback is the first meaningful drop since at least the end of March, if not before.

Rising trendline support from the March lows was broken at the beginning of the week, and the index has moved to test 2870 support and is heading in the direction of the 50-day SMA at 2858. The next areas that may develop into zones of support are 2800 and 2720. The 2930-2950 area saw three peaks that were swiftly sold this week, so the index needs to reclaim those areas to begin rebuilding a more bullish outlook in the short term. The longer-term bullish view remains firmly intact, however.

This information has been prepared by IG, a trading name of IG Markets 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. See full non-independent research disclaimer and quarterly summary.

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