FTSE 100 bearish factors remain in place for short term

<p>November has seen stock indices fall in what is typically one of the best three months for market rallies. If the markets continue to fall […]</p>

November has seen stock indices fall in what is typically one of the best three months for market rallies. If the markets continue to fall further which given the current moment status is probably likely then lower support targets could be tested. There is a potential for a snap back rally if we see Friday’s high being cleared and sustained. The rally could put on a giant of +100 points but more importantly if the trend does not revert to bullish status then the rallies are likely to fade with further selling pressure. Towards the end of this month there appears to be room for upside potential once lows have been established. See key levels below:

FTSE 100 remains below key 5830 level
As the current short term trend is weak the FTSE 100 index trading below 5830 suggests that there is likely to be further downside tests. In order to turn positive the index would need to close above 5786 but more importantly above 5830 this week. Overall the index sports a congestion pattern which will need to be resolved to indicate what the next major move will dictate. If bullish then the index could finally make headways for 6000 but failing to hold 5630 we could be in for more nasty surprises. As long as momentum remains bearish traders may seek rallies as potential shorting opportunities for the short term.

Dow Jones may see upside potential
Having reached support at 12850 the Dow Jones index will need to prove if this level can provide a base for a sharp upwards move this week. It will need to get above 12895 to then move towards 13060 -13135 which may act as a point of resistance before seeing a further decline take place. The major support levels for the Dow Jones reside at 12417 – 12358 where an opportunity for a further sharp rally could commence. The momentum trend remains bearish until a clear bullish signal has emerged. Breaking below 12740 could trigger a trend continuation to the downside.

Gold bullish signal requires confirmation
The sharp rally in last week’s trading session has set the stage for further upside this week for gold Futures. As long as the low of $1,672 has not been violated then the probability to see $1,770 increases in favour of the bulls. The main target still remains at $1,840 which could then set the stage for the $2,000 target to be achieved. Bullish momentum is still showing an increasing probability for upside targets to be achieved but momentum will need to continue without disruption to confirm this scenario. Last week’s bullish engulfing signal remains a focus for short term traders this week.

 

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.