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Levels to watch: FTSE, DAX and Dow

The major indices start to turn lower once more, yet would any sell-off be fleeting or more long lasting?

IG Analyst

Publication date : 2017-04-18T10:09:52+0100

The City of London

Source: Bloomberg

FTSE breaking through crucial support level

The FTSE is moving sharply lower this morning, with the price currently breaching the 7253 mark. That level has underpinned the price action for over a month, and should we see a convincing break below that level, it would be a particularly bearish signal.

Given the trendline break back in mid-March, a drop below 7253 would likely pave the way for a period of significant weakness. As such, this level will dictate the state of play for not only the day but the entire week.

FTSE chart

FTSE chart

FTSE chart

DAX turns back into Fibonacci support

The DAX has faltered at trendline resistance once more this morning, which has brought us back to the 61.8% Fibonacci support level that marked the line in the sand for the index last week.

Ultimately, this recent downturn is seen as a retracement of the rally from 11,850, which means that this current weakness provides good buying opportunities. This bullish medium term view remains relevant, unless we see a break back below 11,850.

DAX chart

DAX chart

DAX chart

Dow resurgence begins to falter

The Dow Jones has rallied in early trade, despite the bearish drop below 20,515 last week. However, the bearish trend we have seen, coupled with the break below key support, points towards a good chance of an impending move lower.

Interestingly, it is the 76.4% pullback which has been respected so far, where a move lower is expected from here. As such, a bearish short term view is in play, unless we break back through 20,702.

Dow Jones chart

Dow Jones chart

Dow Jones chart

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