FTSE 100, DAX and Dow ease back after huge gains
FTSE 100, DAX, and Dow start to ease back, following on from Friday’s blockbuster rally.
FTSE 100 pulling back after Friday breakout
The FTSE 100 managed to break through the 7227 resistance level on Friday, bringing about a bullish signal for the index. The rise of the pound has ensured that the index has underperformed recently, yet with the pound weakening against the US dollar this morning, there is a chance we could see that paradigm shift today.
Nevertheless, the index is turning lower in what looks like a retracement of the rally from 7110. As such, this weakness is viewed as temporary, with a deeper decline providing us with a buying opportunity for the index.
DAX starts to ease back after blockbuster rally
The DAX enjoyed an impressive rally to close out last week, with the index reaching a two-month high. With such a sharp rise in play on Friday, the sentiment seems to be shifting as we start this week.
This could simply be a retracement, but given the size of the prior rally, such a retracement could be fairly significant in size. As such, watch out for further downside over the short term, with the retracement phase unlikely to be over yet.
Dow weakening after sharp rally
The Dow Jones similarly gained a huge amount of ground last week, with the improved sentiment around US-China talks driving the index higher. Today represents Columbus Day in the US, yet IG markets remain open nonetheless. The drop we are seeing is similarly likely to be a retracement, yet the size of Friday’s rally points towards further downside to come.
A break through 27,073 would provide us with a wider bullish picture for the index, and that failure to create a new high above 27,073 provides greater confidence that we are due some weakness for the near term.
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