With a weak start for the UK FTSE 100 the index may be in danger of giving back last weeks gains if the index fails to hold onto key levels. Once again the index has flirted with upside targets but is struggling to get above the 5900 level. If there is any opportunity for the bulls to lift the indices higher this week then we would need to see both wide range days to the upside along with positive closes above major resistance levels. Any weakness which builds into this week may see the markets head into lower targets to test support levels. These levels must hold otherwise October could turn bearish rather than remain bullish. See key levels below:
FTSE 100 trading below 5900
The recent upwards move suggested that the FTSE 100 was set to tackle the 5900 level with ease. Today’s price action showing weakness below the secondary target may indicate that the struggle for higher prices may not be over just yet. Although we do see bullish momentum still in place and cannot see a trend reversal just yet the upside targets of 5900 – 6000 cannot ruled out. For the short term the index will need to hold above 5830 – 5800 and especially by the close of this week these levels will need to stay intact. A move above 5900 would place the index back on track for the 6000 – 6150 level.
Dow Jones 13550 deciding level
Last week saw the Dow Jones hold and close above the 13550 level. The concern was with Friday’s price action towards the close the index fell sharply lower on an intraday basis. Failing to hold onto gains for the close the index did manage to stay above resistance. But on a Weekly chart the Dow Jones will need to clear above the high of 13662 to ideally reach for 13700 and higher. If we see a break of last week’s low then this would suggest a move back to the downside is at hand. The 13338 would once again become the focus for lower support.
Gold regains closes above $1,770
A positive close above $1,770 for last week places gold Futures in a bullish stance. This week the metal will need to move above $1,795 to move towards the $1,840 target. If Gold fails to stay above $1,735 then for the short term timeframe this would suggest a pullback may be in store before reaching higher. It is important for Gold to stay firmly above $1,609 as this would indicate a change of trend. Also the commodity will need to see a 3-5 day pullback or shorter rather than create a consolidation which lasts longer. With bullish momentum still in place the outlook remains positive until further evidence supports a reversal.
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