FTSE, DAX and Dow ease back as Pelosi heads to Taipei
The FTSE, DAX, and Dow have been easing back at the beginning of the week, with Nancy Pelosi’s visit to Taipei bringing short-term risks.
FTSE 100 falls back into trendline and Fibonacci support
The FTSE 100 started off the week on the back foot, with the index turning lower over the course of yesterday's session.
However, set within a wider recovery phase, there is a good chance we see the bulls come back into play for the index. The four-hour chart highlights how price has found support on the confluence of the 61.8% Fibonacci support and ascending trendline.
With that in mind, there is a good chance we see the bulls come back into play here, with a break back below the 7308 support level required to bring about a wider pullback into play.
Until then, bullish positions are favoured here.
DAX easing back after six-week high
The DAX has also been on the back foot, with price turning lower off the back of a Monday morning rise into a six-week high.
Recent economic data out of the eurozone has caused some consternation, with the contractions seen across eurozone manufacturing PMI readings also bringing about a confirmation that the German sector shrank in July.
Nonetheless, we are yet to see a reversal signal for the DAX despite the weakness seen thus far. A move back below the 13339 swing-low could bring a wider period of downside into play for the index.
With price moving back towards that level, there is a growing chance of a wider retracement of the 13029-13572. As such, the short-term picture will be dictated by whether or not we break this 13339 support level.
Dow rolls over as Pelosi heads to Taipei
The Dow has started to roll over following a rise into a six-week high, with price heading back towards an ascending trendline of support.
That weakness comes as House Speaker, Nancy Pelosi, sets off on an Asian tour that includes a highly contentious visit to the Taiwan capital, Taipei.
Quite how China will react remains to be seen, but that heightening of tensions does provide a worrying backdrop for markets. With that in mind, we could see short-term downside as markets determine just how much of a risk this event will be.
To the downside, watch out for a potential trendline rebound, with a break below that line bringing about a wider retracement of the rally from 31694.
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