FTSE 100 bullish start to the week but may be limited on upside

Heading into this week the markets may continue to enjoy following through on last week’s momentum to the upside. However, both the FTSE 100 and Dow Jones are close to potential reversal levels. If the reversal levels manage to prevent a trend continuation then chances are we may be setting up for a correction to the downside. Rather than predict a definitive move the markets would be the key voice in providing the signals of turning bearish. The all important “trend” remains bullish and this should not be ignored as such. Given the recent bullish swings the indices appear to be setting the stage for a minor correction. See key levels below:

FTSE 100 almost at 6150 price target
As we approach the key price target for the FTSE 100 at 6150, the price bars are trading in a narrow range but with a bullish tone. Once the target has been achieved if the index can maintain strength then we could see a reach for 6200. But it would be important for the index to not trade below 6100 which for the moment should provide short term support for this week. If a key reversal occurs and a break of 6100 takes place then we may see a move lower between 6000 and 5900 as a base level before the index continues higher. Momentum remains bullish until we see major signs of a trend reversal.

Dow Jones closing in on 13550 level
Similar to the UK market the US Dow Jones is also close to the upside 13550 level. The last eight sessions have continued the bullish phase and clearing the 13338 level which had been previous resistance should for the very short term provide a support level. The index will need to demonstrate that it has the strength to carry past the 13550 level which had provided major resistance between September to November last year. If the same barrier continues to prevent a challenge then there could be a strong case for a classic Double Top pattern to develop here.

Crude Oil continues to edge higher
This week the price of Crude Oil will need to move above $96.14 to reach for the $100.00 target. As long as the commodity can sustain a move above last week’s low of $93.78 then it is likely the continuation to the upside should remain in focus. Currently the price action shows a Bullish Trend change over the last two weeks after being in a Bearish state from September 2012. Overall from a larger degree objective the price of Oil may be setting the stage for a retest of the $112.00 level which had been the key upside resistance during 2012. A break below $89.00 would negate this outlook.