Bullish trend continues to lift markets higher above key levels
City Index August 20, 2012 4:56 PM
<p>Now that we have reached key price targets, some traders are wondering if the bullish strength will stay intact or if the markets will retrace […]</p>
Now that we have reached key price targets, some traders are wondering if the bullish strength will stay intact or if the markets will retrace the recent bullish swing. The important fact to pay attention to is the bullish momentum. This is still strong and hence we can see that the trend has remained to the upside. There are no signs with momentum reversals on the daily and weekly charts just yet. But there is a sign on technical indicators which is suggesting that the current trend is showing signs of weakness. But rather than jump ahead it would be important to wait for the market to show its hand by providing a Key Reversal. See key levels below:
FTSE 100 on target for 6000 level
We can see that the FTSE 100 is flirting with its resistance level of 5830. The index really needs to move above this level in a thrust pattern to confirm it has formed a base at this level. Of course we note the trend is bullish and that there has not been a break below the short term support levels. With this in mind the index could stand a chance to move higher towards the 6000 level. Once at 6000 the opportunity to then move towards 6250 is possible and along the way 2-3 day pullbacks are likely. But if the index breaks below 5810 then traders should prepare for a potential pullback lasting at least one week.
Dow Jones reaching for yearly high
This index has shown much greater strength than the FTSE 100. At times global indices trace the US markets Dow Jones and S&P 500 whilst at other times there seems to be a lag in time. If this rally in the Dow Jones has strength then it must continue past the 13338 high very quickly. Alternatively the index may break past to form a new print high and then pull back lower to provide a corrective move. The higher highs and higher lows are still respected but a break below 13140 suggests that the corrective move may be about to start.
Crude Oil provides a key signal
Now that Crude Oil has taken out the previous weeks high above the blue bullish bar, this sets the stage for higher oil prices. It’s also important that the commodity stays above the 100-weekly moving average for this week and continues to move upwards. Oil should be on target for the $100.00 level and thereafter to test the $106.00 level. For this week the price of oil should remain above $89.00 otherwise we could assume this bullish reversal may only be a false move and oil could then fall lower to the $80.80 level again. But for the short term the bullish view seems to be the best fit according to the chart.
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