FTSE 100, DAX and Dow drop towards critical support levels
FTSE 100, DAX and Dow tumble on second wave fears, but will Fibonacci support help elevate prices?
FTSE 100 drops back towards channel support
The FTSE 100 has continued its multi-month downtrend, with yesterday’s slump sparking another drop following the recent upward retracement. The rebound seen in early September took us back into the 61.8-76.4% Fibonacci retracement zone, yet we have seen that rise capitulate in style. With price having dropped back towards the 5764 support level, there is a good chance the moderate gains seen since yesterday’s lows will be fleeting. As such, another leg lower looks likely from here, with price heading back towards the lower boundary of the descending standard deviation channel.
DAX slumps into 76.4% Fibonacci support level
The DAX has also seen sharp downside amid a rise in second-wave anxiety, with the drop below 12746 bringing about a wider retracement. That has taken us into the 76.4% Fibonacci retracement level at 12506. With price consolidating around that level, we will need to see a break through the 12702 level to start building a more bullish picture for the index. From this perspective, we would need to see a break below the 12211 level to bring about a fresh wider bearish picture. Until then, it is a case of watching to see if the index can continue the wider bullish trend to rebound from these levels.
Dow Jones drifting lower after Fibonacci rebound
The Dow has started to weaken following yesterday’s late rebound, with the sharp declines seen at the beginning of the week still very much in play. That being said, the wider uptrend seen over the course of recent months does still remain in place unless price breaks below the 25985 low seen in late-July. With price having found support at the 76.4% Fibonacci support level, we need to watch out for whether the index break below yesterday’s lows or starts to regain ground from here.
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