Further falls ahead if momentum follows through
City Index July 12, 2012 3:00 PM
<p> Tuesday marked an indecision day for the FTSE 100. With today breaking below 5625 this suggests that there could be more follow through to […]</p>
Tuesday marked an indecision day for the FTSE 100. With today breaking below 5625 this suggests that there could be more follow through to the downside. Whilst the index has traded sideways for the last three days the likelihood of a bearish move is increasing. It’s remarkable that whilst the US Dow Jones has declined the UK FTSE 100 index has managed to hold onto the upside closes.
The closing price is important as this indicates who is in control at the end of the day. And if the bulls manage to hold onto the upper third range then the index could be setting up for a positive weekly close. Friday should tell us what next week’s forecast has in store. Today will need to see if the FTSE 100 manages to demonstrate further weakness by trading closer to 5625 by the close of play.
As previously highlighted the Dow Jones could face resistance at 12776 and so far the index has not managed to climb above the important 12835 resistance barrier. This of course has led the index to fall lower and Tuesday also has provided a Trend Reversal which saw Wednesday follow through and has now indicated at least for the short term that the bears are in control.
Today the index could see resistance at 12600 which if crossed over will face 12666. Support resides at 12538 and 12473. The bearish tone is likely to drag the index lower towards key support targets at 12235 if the decline takes on a stronger phase.
In the commodity sector gold continues to fall. Most likely the metal will head lower towards the support target of $1,547 and then face $1,485 as the main objective. The trend remains bearish on a weekly time frame and unless $1,607 has been surpassed the view is for lower prices into next week.
Crude Oil has only slightly gained points so far this week. The important number for Nymex Crude Oil is $89.33 which really needs to be cleared if bullish momentum is to lift the commodity higher into the month end. Traders should monitor $82.50 which if violated may drag Oil down to $75.33 and even as low as $65.85 which could provide a solid base for a major rally.
GBP/USD saw a sharp decline in the early morning session today. The currency pair will need to overcome 1.5524 today if the pair wants to take on 1.5562 but if weakness continues into the afternoon US session the level to watch for support comes in at 1.5432 otherwise GBP/USD could face lower prices into the Asian session.
StoneX Financial Ltd (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.