FTSE 100 reaches target of 5600

Sandy Jadeja, Chief Technical Analyst at City Index, analyses the market to identify key technical levels for major commodities and indices markets including the FTSE 100 and Dow Jones this week.

06/12/2011, Sandy Jadeja, Chief Technical Analyst, City Index 

The markets delivered the end of month rally as expected for November. Currently the indices appear to have reached an indecision level with reversal patterns providing an early indication that a pullback could be in the making. If we do see a correction then it is probably going to be short term followed by a further move higher. The short term trend has turned bullish given last week’s price action. As long as momentum remains bullish then December could end on a positive note but remain cautionary leading into January 2012. Gold prices have turned lower with negative momentum and may now see lower prices ahead. Key price levels are provided below:

FTSE 100 reaches target of 5600

After clearing the 5490 level the FTSE 100 has now reached the upside target of 5600. If the index can manage to pullback slightly then the opportunity to catch another wave higher could carry the FTSE towards the 5820 level. It is important that the support level of 5270 and 5200 remains intact. A violation of this level would suggest that the rally is over and a move lower could drag the index down to the 5000 level. If however a minor pullback assumes the FTSE can sustain support we should look for bullish signals over the week to see the bulls come back into play for further healthy gains.

FTSE 100 Daily

Dow Jones back at resistance zone

The US Dow Jones index provided a reversal signal in last week’s price action but has manage to trade higher at the start of this week. But given the candlestick patterns from Friday to Monday these suggest a minor top may be in place. If the index breaks below 11970 then this would confirm a pullback towards 11710 may occur over the coming week. A bullish move requires the Dow to maintain a break above 12186 to reach for 12350. The key level for the Dow is 11560 as support and any moves below here could see the Dow fall back towards 11345 again.

Dow Jones Daily

Gold turns bearish below $1718

There was hope for higher gold prices after seeing a move above $1730 – $1760 last week but the end of last week provided a reversal pattern with a high at $1762 and Monday confirming the negative play. Gold may now fall lower to the $1680 support area and possibly even pullback as low as $1635 if negative momentum carries through into mid-week’s trading. It would require a push above $1762 to resume an upward bullish trend to maintain its target of $1785 where we have already seen resistance. We may even see choppy price action over the December period until a breakout occur.

Gold Daily