Dow Jones hits support target with snapback rally likely
City Index November 9, 2012 8:20 PM
<p>The Presidential Elections have not provided any positive aspects for the US Dow Jones. After the winning vote for Obama had been settled the markets […]</p>
The Presidential Elections have not provided any positive aspects for the US Dow Jones. After the winning vote for Obama had been settled the markets were rattled and took the brunt of a sharp blow to see a sharp decline this week. As previously stated we were expecting a decline after the main event as the trend had already indicated bearish factors were in place. Typically rallies in a bear phase often see selling pressure resume which is exactly what has transpired earlier this week. However, a snapback rally is likely going into next weeks trading session as long as the Dow Jones closes above the current support level. See key levels below:
FTSE 100 trading below support
The triple top pattern for the FTSE 100 has certainly pushed the index lower and more importantly has seen the index trade below key support. Closing below 5830 should now create a resistance barrier for the index at least for the short term. Also as we have seen a bearish turn over the past three trading sessions the opportunity for lower prices could now increase placing control into the hands of the bears again. As long as bearish momentum continues the FTSE 100 could be looking at 5630 as the next objective to find support before attempting to rally into the year end.
Dow Jones reaches 12850 target
After failing to find support at the 13060 support level the US Dow Jones has managed to reach the lower target of 12850 very swiftly. The important component here is that the trend remains bearish after facing resistance at 13550 which suggests that rallies from current levels may face further selling pressure. Currently if we see a close above 12850 then this could lead to a snapback rally towards 13060-13135 before facing another decline. We also see a series of lower highs and lower lows all of which indicates weakness for the near term until a trend reversal takes place.
Gold provides a bullish reversal
A strong move to the upside has lifted gold prices this week. Going into next weeks as long as we see a break above this week’s high then the move towards $1,770 and $1,840 is very likely. The trend has remained bullish after seeing a classic pullback. And as long as the $1670 low is not violated, next week should favour the bulls and hold positive into the month end. Many traders are calling for the $2,000 level to be tested by year end and if momentum remains positive then this scenario cannot be ruled out. However, we do need to see support levels hold otherwise a trend reversal may suggest otherwise.
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