Markets looking to reach next upside target levels

<p>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 […]</p>

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.

10/01/2012, Sandy Jadeja, Chief Technical Analyst, City Index


Markets looking to reach next upside target levels

A mixed week previously has seen the indices hold steady at resistance levels. There could now be a Continuation Pattern in play suggesting that the markets could be heading towards their next upside objective soon. As long as this week remains positive the bullish trend remains firmly in place. The first five-day indicator now suggests that the year ahead could end in positive territory but one should not negate sharp corrections along the way. Gold also stands a chance to recover some lost ground but remains bearish until we see a reversal take place in terms of an ABC pattern completion. Key price levels are provided below:

FTSE 100 holding looking strong

After a small degree pullback in last week’s trading session the FTSE 100 has proven itself by holding onto 5445 and also above 5600. If we see this level hold firm this week then the doors to 5820 could open up sooner rather than later. But traders should watch for expansion bars to prove the case for a trend continuation to develop. If we fail here and see a close below 5600 then the index may retire here short term and decide to fall back down to the 5445 level. But as the trend remains bullish the argument supports an upside move rather than a bearish play for now.

Dow Jones holds firm at 11350

The Dow Jones managed to hold above 12140, which now indicates that the index is still strong. Once the Dow sails past its recent minor highs formed last week the move to 12545 should commence with a higher probability of reaching this fairly quickly. This all depends on how much the index hovers around the 11350 zone. If at any point the Dow Jones retreats and fails to hold above 11350, we would need to monitor price action closely as a swift move to the downside could take the Dow down towards the 11345 level.

Gold may have completed 5 waves down

Having held $1575 as support, gold prices still remain fragile. It would require for this commodity to thrust above $1645 – $1680 quickly to ensure that the recent bearish move has completed its bearish play for now. Although the trend remains bearish as indicated by the red bars, the trend reversal may take some time. But ultimately the main objective is the wave 1 low and wave 4 high which need to be breached. Once we see gold clear through $1680, this would confirm that a short term low has been completed at $1500 and that the commodity could be looking to retest the $1780 high.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

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.

For further details see our full non-independent research disclaimer and quarterly summary.