Markets looking weak again after failing to reach targets

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.

07/11/2011, Sandy Jadeja, Chief Technical Analyst, City Index 

Markets looking weak again after failing to reach targets

The markets failed to follow through on bullish momentum last week and has since caused weakness into the start of this week’s trading. As outlined previously, sharp pullbacks could take place and this certainly seems to be the theme song for the moment which will now require a thrust above the recent high to convince the bulls that the trend could turn around again. There is plenty of uncertainty in the markets at the moment which is causing volatility to create a difficult choppy trading environment. Until we see breakouts above key levels the week ahead may cause further frustration for both the bulls and bears. Key price levels are provided below:

FTSE 100 attempts failed at 5600

Failing to clear 5750 the FTSE 100 index managed to creep below 5501 and reached a low of 5338. Currently the index is looking bearish below 5600 which has proved to be resistance yet again. Staying below 5445 may indicate another leg down could be on the cards and may take the index lower towards the 5200 level. If the FTSE does continue to demonstrate weakness into this week then we could even see the intermediate term trend turn bearish again. The index will need to achieve a move back above 5600 to negate this view.

FTSE 100 Daily

Dow Jones falls on reversal bar

A short term reversal bar which warned of a turn to the downside had taken the Dow Jones below 12164 as expected. Once again the Dow has created another bearish pattern in last Friday’s close which could see Monday close lower unless the index is able to get above 12065. Trading below 11850 could see a very sharp turnaround and put the bears back in control again. Ultimately the Dow is looking to test 12350 but positive momentum is lacking at the moment. November is generally a bullish month but the index will need a little help to see a shift in sentiment towards the bullish side.

Dow Jones Daily

Crude Oil edges towards $95.30

So far crude oil has played out as expected to reach for the $95.30 level. As long as the commodity can sustain a close above $87.00 then oil should reach and surpass the $95.30 price target. So far the trend reversal above $86.24 has remained bullish and until a bearish signal occurs the next few weeks are likely to continue being positive for oil traders. We continue to see short term higher highs and higher lows and $89.17 should hold but a break below here could drag oil back towards $85.00.

Crude Oil