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CFDs are complex instruments. 72% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

FTSE 100, DAX and Dow could retrace after recent gains

​FTSE 100, DAX and Dow are starting to show tentative signs of weakness after recent gains. Will this break the bullish outlook or provide a buying opportunity?

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FTSE 100 upside proving short-lived after sharp decline yesterday

The FTSE 100 fell sharply into the 7473-7484 support zone yesterday, pointing towards the possibility of a wider breakdown should the index fall back below that 7473 low.

With the index currently on track to form a bearish engulfing pattern, we could see another challenge of that zone. The short-term outlook will be determined by whether that level is broken or not. Should that occur, we will be looking at a potential decline into the 76.4% retracement at 7430.

FTSE 100 chart Source: ProRealTime
FTSE 100 chart Source: ProRealTime

DAX starts to ease after sharp gains

The DAX has clearly outperformed its UK counterpart, with the index rallying sharply throughout the week.

We are looking at a potential bearish engulfing pattern with this current candle, pointing towards the potential for a short-term pullback. However, should that happen we would be looking at it as a retracement phase where a wider bearish picture only comes into play in event that the index declines below 12,465.

DAX chart Source: ProRealTime
DAX chart Source: ProRealTime

Dow continues to trade within consolidation zone

The Dow Jones has been trading within a consolidation phase over the course of the past fortnight, with the price attempting to gain ground overnight.

That rally has failed to break through 27,370, and there is a chance we will continue to consolidate rather than break out of this phase. Certainly, a break below 27,187 would raise the likeliness of a continued directionless consolidation phase. However, if we break through the 27,370 level, it would point towards a possible bullish breakout and exit from this two-week phase.

Dow Jones chart Source: ProRealTime
Dow Jones chart Source: ProRealTime

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