Do we have Key Reversal to reverse the trend?
City Index August 22, 2012 4:57 PM
<p>So far the stock indices are struggling to maintain a grip on attaining new highs. We see that whilst the markets have moved higher the […]</p>
So far the stock indices are struggling to maintain a grip on attaining new highs. We see that whilst the markets have moved higher the FTSE 100 in particular is moving sideways. It has so far managed to stay above 5830 but has not reached for higher important targets. Meanwhile the Dow Jones had yesterday provided a potential Key Reversal. This is where we see an intraday move higher with a negative close. This typically signifies a situation where markets can lead to a trend change. Although it may be too early to confirm this we would await to see how the close on Friday may provide a better picture. See key levels below:
FTSE 100 still holding 5830 level
The FTSE 100 index has been unable to thrust higher towards the 6000 level. Still holding onto the 5830 resistance level the more it stays here without any progress the higher the odds for a move lower. It is important to point out that the trend is still bullish on a momentum basis and it would take a sharp decline with a negative weekly close followed by a further break below a weekly low to confirm a trend reversal has occurred. Right now the index should aim to stay above 5830 and not break below 5810 which would suggest an early warning sign for a decline that could lead the index down towards 5460.
Dow Jones triple top pattern warning
On a weekly basis the US Dow Jones has attempted to break above 13338. Yesterday the index reached for the high only to fall back lower. This is a sign of weakness. If we see further failed attempts such as yesterday’s scenario then a corrective decline could well be in the making. Ideally the index will need to close lower by the end of this week and if it closes below 13140 then the 12800 target could come into play. Similar to the UK FTSE 100 the index is still bullish until we see the development of red bars which may take a few more days to a week of negative trading. Clearance of 13338 negates a bearish view.
Crude Oil edging higher but slowly
The price of Crude Oil is above the 100 week moving average indicator. That is technically bullish. But the commodity will need to pick up momentum if it wants to aim for the $100 – $106 level. The recent rally may eventually make a high followed by a decline to set the stage for an ABC type of pattern. That means a decline lower but above $80.80 and then another swing higher to reach for $106 but if the commodity moves straight to $106 and then declines the bulls would be looking for much higher prices and as high as $120 could be on the cards. $89 will need to be sustained for a continuation higher.
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