A push higher into upside resistance expected
City Index May 28, 2012 8:57 PM
<p>So far the Stock Indices have reached lower levels successfully. The current move suggests that the move is likely to be to the upside now. […]</p>
So far the Stock Indices have reached lower levels successfully. The current move suggests that the move is likely to be to the upside now. This is not to be taken as a bullish view but rather a corrective move to reach resistance targets before seeing a continuation to the downside. Only if the move higher can break past resistance barriers followed with pattern confirmations to show that the reversal does have strength then the bullish trend could become viable. But as stated in previous reports the Weekly and Monthly time frames remain bearish until proven wrong. Gold still remains range bound. See key levels below:
FTSE 100 aiming to clear 5400 zone
After seeing the index fall to lower support targets the FTSE 100 is now in a position to move higher. Most likely the index will move above the 5400 level to test 5485 followed by a test of 5535. Since we have seen failures at upper resistance levels followed by declines the index is likely to follow the same pattern unless of course we see a very strong move above key levels backed by positive momentum without divergence setups. Several technical indicators are showing signs of the markets being oversold but these can be unreliable in strong markets. Traders should watch closely how the FTSE reacts at the levels this week.
Dow Jones target 12700
If the US Dow Jones can hold above 12311support the odds are the index will look to test the 12700 level. After breaking below the 12700 support level the Dow Jones has created an impulsive move to the downside. Present conditions indicate that any move higher will most likely be a corrective move and that we will see the next swing down after the correction has been completed. Similar to the European indices the Dow also will need a very strong move higher to negate the bearish outlook. This week the index will need to clear above 12590 to see the 12700 level as a test.
Gold stuck in consolidation mode
Until Gold prices have broken out of its trading range the commodity is stuck between two prices. With the trend clearly being to the downside Gold may see lower prices in the months ahead. But for the short term Gold will be looking to test the upper boundary at $1,600 with potential for the $1,625 target. At this stage for the bulls to come back into control Gold will need to clear past $1,670 which is the high of this month. Some could say that the recent price action can count as a Double Bottom Pattern. This is a valid statement and could mark an important low if Gold can break past $1,670 sooner rather than later.
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