European stock indices are under pressure due to the threat of euro-sceptic policies in Italy and the impact of protectionism on a global economy. Trade tension remained in focus as the heads of several major central banks expressed concern over the impact it may have on the global economy. German car maker Daimler in a profit warning on Thursday said that sales of its Mercedes-Benz SUVs would suffer from fresh tariffs on cars exported from the U.S. to China. That prompted shares of other German automakers to fall as well.
On the daily chart, the DAX (Germany30) index broke a major horizontal support at the 38.2% retracement from the lows of March at 12600. There is now a possible double top with a measured target of 12000. The index will find support at 12450 and the 12270. The DAX needs to close back above 12600 to change the outlook with resistance at 12740 and 12825.
On the daily chart, the FTSE 100 (UK100) was driven lower by the strength in the British Pound after the Bank of England interest rate announcement yesterday. The index has now found support at 7550 and a break could lead to more downside with support at the 38.2% retracement 7500 and then 7340. A reversal above 7630 is needed for a move back to the June highs near 7770.