Pullbacks commence at resistance targets

After reaching a point of decision the stock indices managed to turn lower. But traders will need to maintain a close watch to see how much of a correction transpires from current levels. If a nominal corrective move occurs then this leaves the door open for higher prices into early October. However, a close this week below the resistance levels would further indicate that the initial decline may lead into intermediate term corrections lasting several weeks. As mentioned previously the momentum has remained bullish and until we see a shift to the bearish side the short term support levels need to be monitored. See key levels below:

FTSE 100 holding above 5830 level
Once again the FTSE 100 has managed to keep its head above water by maintaining a hold above 5830. With Tuesdays large decline from the US Dow Jones taking place we are likely to see an impact on the UK index. If we see a close today below 5830 and especially by Friday’s close then the seasonal effect of corrections may be at hand. More importantly for the bears they will need to increase the pressure on the downside to turn momentum from bullish to bearish in order to see a sizeable correction. To head higher the index will need to now get back above 5875 followed by the 5900 level.

Dow Jones breaks out of congestion
Finally after spending some time sitting above the 13550 level the index has managed to break away from congestion mode. See a move below 13500 saw an acceleration to the downside in yesterday’s late trading session. For the index to continue its path to the downside it should ideally maintain a close below 13550 and now reach for the 13338 target. At this level the opportunity to see this as support may lift the index higher again. The next few weeks should paint a clearer picture and provide longer term clues. But yesterday’s break below last week’s low sets the stage for further declines at least for now.

Gold trades in a narrow range
There have been no substantial moves for gold so far this week. Given the uncertainty pattern from a chart perspective last week and also at a key level, it is not surprising to see a further consolidation type of set up taking place. On a bearish corrective stance the metal will need to break below $1,750 to retrace lower. Alternatively gold would require a move above last week’s high to continue towards the next objective of $1,840 over the coming weeks. If we see further consolidation at $1,770 this would probably work in the bulls favour and provide another base to launch upwards.