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Levels to watch: FTSE 100, DAX and Dow

Stocks are declining once more, following a bearish Asian session. However, with the Dow hoping to fall into key Fibonacci support, could we soon see the bulls come back into play in the US?

IG Analyst

Publication date : 2018-11-20T09:23:03+0000

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FTSE 100 grinds lower from 61.8% resistance

The FTSE 100 has managed to break below the 6978 low amid a period of clear indecision for the index. Ongoing uncertainty over Brexit is likely to ensure that this market is difficult to trade, with any major market move likely to be reflecting a development in from the EU or UK rather than simply a technical move.

As such, watch for a potential extension of this move lower, with an upward retracement coming before long. However, make sure to keep on top of the news for this market.

FTSE 100 chart

FTSE 100 chart

FTSE 100 chart

DAX extends sell-off from Fibonacci retracement

The DAX is continuing its descent, following on from a retracement into the 76.4% Fibonacci level at 11,662. Since then we have seen three deep retracements (>76.4%) followed by a 61.8% pullback. That shift away from deeper retracements into a more moderate rebound highlights the growing confidence in the bearish story.

We are likely to see further downside, yet whether we rebound in the near future or not remains to be seen. With that in mind, a short-term rebound would be a good selling opportunity if we do not see a break through the 11,568 swing high.

DAX chart

DAX chart

DAX chart

Dow turning lower from rising wedge pattern

The Dow Jones has been weakening off the back of a bearish rising wedge formation. The wider picture points towards the sell-off seen over the past fortnight as being a retracement of the 24,120-26,278 rally.

However, with the price having failed to respect the 61.8% retracement and then forming a rising wedge pattern, it looks likely we will head towards the 76.4% level at 24,629. A bullish theme is expected to come back into play before long, with a fall below 24,120 required to negate the medium-term bullish picture.

Dow Jones chart

Dow Jones chart

Dow Jones chart

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