Markets revert back to bullish momentum again

After the recent signals for a potential bearish decline the markets have reversed and provided a bullish momentum signal once again. This has been a frustrating time for both the bulls and bears as we have seen false signals occur and then only to change direction again. Currently there is a divergence in price between the UK and US markets. We see that the UK has not yet moved above the August highs whilst the Dow Jones is shy a few point from last month’s high. It remains to be seen if the FTSE 100 will catch up with the Dow or rather just continue to move sideways. See key levels below:

FTSE 100 on route to re-test resistance
It is difficult to read into the current price behaviour given that we have seen some minor strength last week but not enough to lift the index to previous highs. However, with momentum now turning bullish again this must be respected. It may be that the index takes a few days to muster up some strength before reaching for the August highs or else the move over the last two days may be completely retraced. For the immediate term the index will need to clear past 5900 to then aim for 6000 otherwise a failure to hold onto 5630 may see the index head back towards 5460.

Dow back at August highs again
With the US Dow Jones back at the August highs can we expect higher prices? We did see the appearance of a potential trend reversal last week but there was no follow through. Instead the index reversed and is now back at the 13338 resistance target. This level will need to be cleared if there is to be any progress to the upside towards 13500. For the short term the index will need to respect the 13060 support level or we may see a move to the downside take place. This week should prove to be important to see either a trend continuation to the upside or consolidation suggesting resistance may be a hurdle again.

Crude oil holds above support
The commodity has managed to hold above support once again last week. But Crude Oil will need to move to the upside very quickly in order to regain strength. The current price patterns on the Weekly chart are indicating that it may be running out of steam. Also the Moving Average remains bullish supporting the view for higher prices and ideally the commodity will need to stay above $96.30 for a few more weeks in order to aim for the $106 objective. If the bears manage to bring the price of oil below $96.30 then the $89.00 may be tested again and potentially $80.80 if the correction picks up strength.