Markets could sell off further if current support fails

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.