FTSE 100 share price may see sharp falls this week

<p>This week may see weakness bring the stock markets lower with mid-week being a volatile period leading towards the close of Friday. We have seen […]</p>

This week may see weakness bring the stock markets lower with mid-week being a volatile period leading towards the close of Friday. We have seen the FTSE 100 and Dow Jones both test their resistance levels successfully. As the indices have shown a reversal at the key levels the opportunity of an accelerated move to the downside has increased based on the current chart patterns. For this scenario to occur, the indices will need to stay below the upper levels. The FTSE 100 has not shown a momentum trend reversal but the Dow Jones has indicated further weakness. See key levels below:

FTSE 100 reverses at resistance target
If we see the FTSE 100 fails to move above 5900 then the opportunity to see lower prices increases this week. The index which shows a double top pattern suggests a bearish play is likely. So far the index has not shown a bearish momentum reversal which would be ideal to prove that a move to the downside is more than likely. However, breaking below 5865 may be the first clue to suggest that the index could be about to break lower. Thereafter momentum picking up by mid-week should then further indicate weakness. Lower support rests at 5830 – 5770. Moving above 5900 would invalidate the bearish view.

 

Dow Jones turns bearish again
The close of last Friday has provided a bearish momentum signal. This suggests that if we see a break below last Fridays low today then the index may start to build up further bearish momentum. It would be important for the Dow Jones to then stay below 13338. Breaking below this support level the index may then head lower towards 13240 and ultimately 13125 – 13060 as a main target. If the trend remains bearish according to the momentum reversal then lower prices could develop. For the index to negate the current bearish view it would need to move above 13700 this week.

 

Gold reverses at resistance target
Recently the price of gold suggested a bullish move towards $1,770 which has so far been successfully reached. We have seen the commodity reverse at this level but still remain bullish from a momentum basis. As long as gold holds above $1,609 and $1,550 then there remains the possibility for higher prices towards $1,840 and $2,000 as a main objective. The metal would need to form a higher low and then break above its recent high taking out the $1,770 level to provide a trend continuation to the upside. Moving below $1,735 could see short term weakness towards the support levels mentioned.

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