FTSE 100, DAX and Dow at risk of short-term declines
FTSE 100, DAX, and Dow are all showing signs of potential weakness after recent gains.
FTSE 100 reversing lower
The FTSE 100 completed a head and shoulders formation yesterday, bringing a more bearish outlook for the index. The wider picture points towards a possible bullish reversal coming into play before long.
However, it looks like we could see further downside over the short term, with the decline below 7205 adding to that bearish theme. As such, further downside looks likely today, with a break through 7245 required to bring about a more positive outlook.
DAX starts to roll over after recent rally
The DAX has been on a consistent rally throughout the past two weeks, bringing the index back into a five-week high yesterday. Nonetheless, the price is now starting to turn lower from a rising wedge formation, pointing towards a possible bearish phase coming into play. It looks as if 12,186 represents the short-term intraday hurdle to overcome in a bid to reverse some of the recent gains.
Alternatively, we would need to see a break up through yesterday's high of 12,244 to bring about a bullish continuation signal. Until then, this index looks at risk of a sharp decline if 12,186 is broken.
Dow falls into trendline support
The Dow Jones has been weakening overnight, bringing its price back into an inside trendline. That support line should be important as a determinant of how things play out today, with a break lower from here pointing towards a day of downside ahead.
Ultimately, such weakness would be seen as a retracement of the rally from 25,973 though, highlighting the short-term nature of such potential declines.
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