Markets continue with a bullish attitude negating bearish view

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.

03/02/2012, Sandy Jadeja, Chief Technical Analyst, City Index 

Markets continue with a bullish attitude, negating bearish view

Despite showing early signs of price reversals the markets have continued higher this week. Positive reaction to unemployment figures at the close of the week helped to lift the market’s mood and helped indices higher towards upside resistance targets. Rather than bucking the trend breakouts have played for the better, capturing profitable moves recently. The question is when will the much-awaited reversal show its hand? Also breaking through resistance and holding onto a bullish stance has been Gold. The end of January has seen the commodity increase by more than $200 per ounce and it seems there is more upside ahead. See key levels below:

FTSE 100 clears second base resistance

As mentioned at the beginning of the week “the trend remains bullish until a confirmed trend reversal has shown its hand”. Even though the index had tipped below support this has turned out to be a false breakout. Instead the 5690 level has held as support and helped lift the FTSE 100 past the 5820 level. We may find that the 5820 level could provide support for the index and see the index reach for the 6000 target. The trend has remained bullish since the break above 5469 and until we see a clear trend reversal the index remains on target for higher prices. A short term pullback cannot be ruled out along the way.

Dow Jones breaks past 2011 high

It is important that the index remains above 12450 otherwise the decline could turn into something more serious.” This was mentioned earlier this week and the Dow has held above this key level. We can now expect the index to reach higher into the key zone above, which comes in at 12891 – 12935 and possibly higher. The pattern suggests the index is in extension mode and also that there could still be room for another move higher after a pullback. It is frustrating for the bears as each reversal has been negated and created false alarms along the way but for now the bullish trend remains intact until the next signal.

Gold reaches for the $1800 level

It seems that the strength in the stock indices have not had a huge impact on Gold just yet. Currently the price of Gold remains bullish since the clearance of $1668 and has broken through the hurdles along the way. For now the metal will need to hold above $1715 for the very short term and above $1680 on an intermediate term basis. A pullback would be healthy at this stage and also offer an opportunity to potentially catch the next wave up. Until further patterns develop Gold remains bullish.