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Levels to watch: FTSE 100, DAX and Dow

Market gains are skating on thin ice, with recent wedge breakdowns pointing towards the potential for a subsequent sell-off.

IG Analyst

Publication date : 2018-03-06T09:50:40+0000

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FTSE 100 regaining ground after wedge breakdown

Following on from a wedge breakdown into the 76.4% retracement, the FTSE 100 is moving higher.

There is a strong likeliness we will see the index move higher from here, yet it is worthwhile noting that given the wedge break, there is a strong chance we could be seeing another retracement before we turn lower once again. A break above 7340 would negate such a theory, and point towards the market being on a more sustainable recovery path. Until then, while further upside is expected in the near term, there is also a chance that we will see the sellers come in once more.

FTSE 100 chart

FTSE 100 chart

FTSE 100 chart

DAX weakening after 61.8% retracement

The DAX has been a notably more bearish index of late, with the more subdued recovery paving the way for a tumble to a level within touching distance of the early February low of 11,696.

The subsequent rally has taken the index into the 61.8% retracement, with the price now starting to turn lower. With the stochastic also beginning to turn over within overbought territory, there is reason to believe we could see this index start to turn lower from here. A break above 12,612 would be required to negate the view that this is a retracement which paves the way for further losses.

DAX chart

DAX chart

DAX chart

Dow retracement expected to bring further downside

The Dow Jones has been regaining ground, similar to its European counterparts, following on from a drop below the 24,593 swing low.

That means that we are likely looking at a retracement before the market turns lower once more. With that in mind, it makes sense to look out for Fibonacci resistance as areas to look for this market to turn lower. A break above 25,823 would negate this view.

Dow Jones chart

Dow Jones chart

Dow Jones chart

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