Markets could sell off further if current support fails
City Index June 16, 2011 3:20 PM
<p>The recent decline from the May highs has taken stock indices right down into major support levels. Failure to hold at current levels could spark […]</p>
The recent decline from the May highs has taken stock indices right down into major support levels. Failure to hold at current levels could spark a further sell off. The FTSE 100 failed to hold onto 5787 and is now at a key level of 5702. If the index does not stabilise here, it could be looking at reaching 5594 with the potential of falling as low as 5456. Immediate action for the FTSE is to see a break above 5830 to turn this correction around. The US Dow Jones is also closing in on 11838 with a lower support level at 11713 on the cards. If either of these levels don’t support the index then 11555 is a high probability trade for the bears.
Gold fails to show signs of strength
Gold has not shown any signs of strength as it sits within a consolidation between $1,555 and $1,511.
The metal will require clearance above the Pivot High of $1,555 in order to continue its upwards bias. There is a strong possibility that if August Gold takes out the $1,511 level, then a downward bias towards $1,472 is more than likely.
Sterling dips in today’s trading
Sterling continues to trade lower in today’s London session. The Asian session saw GBP/USD trade as high as $1.6225 before starting a descent lower, taking out several support levels along the way. Currently the pair is below its 20-period moving average and momentum indicators suggest further weakness is likely. The May low of $1.6058 is close within reach with an objective of lower prices at 1.5936, but 1.6109 may offer a short term support base if the US session does not add further selling pressure.
GAIN Capital UK Limited (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.