More signs of weakness now becoming clearer

<p>The Federal Reserve’s comments were not supportive enough to keep the markets at their highs on Friday’s close. As for the UK market the early […]</p>

The Federal Reserve’s comments were not supportive enough to keep the markets at their highs on Friday’s close. As for the UK market the early warning signal may be a lead for the US market to follow through on the down side. There are some signs of weakness which are now starting to show which is suggesting that the resistance levels may become key levels for the UK and US stock indices. We may see the trend turn bearish which could now last for several weeks which could then take the markets to the lower targets. It is the UK index which is weaker that the US Dow Jones but essentially both may be in line for declines. See key levels below:

FTSE 100 momentum turning bearish
Currently the FTSE 100 index is approaching a previous resistance level at 5700 which had taken just over one month to clear. We may see the index find support at the 5700 level but interestingly the index is now turning bearish on a momentum basis as seen by the emergence of the Red bars. If the index fails to hold onto 5700 then most likely the 5460 target could come into play. We have 5600 – 5615 to clear on the downside followed by 5500 but for the index to negate this view the 5830 level will need to be taken out. If the 5830 level is cleared then once again the FTSE 100 will try its hand at 5900 but seems unlikely.

Dow Jones holding onto key level
Last Thursday saw the Dow Jones turn bearish with the index dropping below 13060. For a moment it appeared as if the index would take out Thursday’s low to confirm bearishness but the index managed to trade higher but fail to hold onto the highs by the close. On Tuesday the index will need to sustain the 13060 level otherwise we could see the next target price come in at 12800 with lower price levels as objectives depending on how strong a move down we see this week. It is important to see a thrust lower for the bears to turn this into a key move otherwise this could just be another corrective move.

Crude Oil on route for $106.00
Crude Oil turning bullish four weeks ago has seen the commodity trade higher but is still lacking real strength. On clearance of $100 per barrel the opportunity for reaching towards $106.00 becomes more likely. At the current level, Crude Oil seems to be holding onto the $96.30 resistance level and also above the 100 Week Moving Average. We do have a higher low formation which is encouraging for the bulls and it would really require a move above $111.30 to turn long term bullish. A pullback towards $89.00 should not be ignored if we see a move lower.

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.