Markets reverse on exact target price

<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.

05/09/2011, Sandy Jadeja, Chief Technical Analyst, City Index 

Sandy

Markets reverse on exact target price

Having reached the expected 5445 resistance target the FTSE 100 index has mananged to reverse from this level and fall sharply lower. The US markets have also not escaped from the clutches of the bears. With Monday closed for a public holidat Tuesday is likely to see follow through from the falls in European markets. Clear patterns have developed within the recent upside corrective move. Although the possibility still exists for another push higher all will depend on how this week pans out and if support levels can be maintained. Gold prices continue to edge higher but on a narrow range. Key price levels are provided below:

FTSE 100 hits upside target and reverses

The move to the 5445 target has traced out a classic ABC reversal pattern. We may be a little too early in calling an intermediate term top at this level but all eyes should remain on two price levels for support. We have 5015 as support and 4930 as a Pivot level. More importance should be paid to 4930 which if broken is likely to see the FTSE trade back lower towards 4781 again. Upside moves will need to see the index step above 5449 which is last week’s high. Overall the intermediate term trend still remains bearish since July 27th 2011.

FTSE 100 Daily
FTSE 100 Weekly

Dow Jones unable to thrust higher

Not being able to clear above the key 11365 level to aim for 11950 puts the US Dow Jones in a difficult situation. As noted previously the 11677 – 11727 would have stalled the index and this scenario has indeed taken place. Also the recent rallies have presented selling opportunities and if the Dow falls below 10800 then the decline could get very serious. The opportunity to see 10430 could become reality quicker than expected if the index fails to get back above 11365. Like other indices the important point is that we are in an intermediate term bear trend.

Dow Jones Daily
Dow Jones Daily

Gold must clear $1,890 resistance

We look at the $1,890 level as resistance which needs to be cleared if Gold is to tackle the $2,000 level. This looks likely now that we have seen the $1,700 level hold firmly. The 20 Day Moving Average also support bullish momentum as prices remain above this indicator. If stock indices continue to fall then this could help lift Gold prices as investors continue to pile into the safe metal. Rather than bucking the strong trend the pullbacks have offered buying opportunities and may continue to do so until we see a clear trend reversal.

Gold Daily

Gold Daily

Join our live webinars for the latest analysis and trading ideas. Register now

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.

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