Rally picks up steam but still needs to clear key levels

Rally picks up steam but still needs to clear key levels

Instead of seeing a decline to lower levels, stock indices provided a pullback to then launch a push higher with very strong momentum on Friday. Now the indices will need to clear above resistance levels and also sustain the current move in order to reach for the May highs. Indices recently turned Bullish, and given the negative economic backdrop, the Bears are left scratching their heads with disbelief. However, price action is in full force to the upside but traders will need to watch key chart pattern alerts for sudden pullbacks again. The month of August still has certain key time cycle dates to clear for further rallies. See key levels below:  

FTSE 100 now seeking 5830 level

Bullish momentum held and carried the FTSE 100 past the barrier at 5700 and is now setting its target at 5830, which is not far from Friday’s close. Once the index clears the 5830 level we could see it reach for 5900 – 5975 if the bullish momentum can continue over the coming week. Even though the index is in a Bullish mode there exists the opportunity for sudden moves to the downside as the monthly charts are showing a divergence on key technical indicators. This suggests that the current moves may not last long enough to penetrate new highs but we will not ignore the current strength.

FTSE 100

Dow Jones rallies from previous high

The 12835 level did hold and elevated the Dow Jones past the hurdle of 13060. Now the index appears to be set to target the 13190 level but at this stage it may also pull back for the short term. Here again the Bullish momentum reversal, which took place on July 26th, must not be ignored and until we see signs of a turn around the index could see a test of the 13270 highs. So far the three drive pattern failed  to bring the index lower and the daily chart has shown higher highs with higher lows. It would require a break below 12870 to negate the current Bullish rally but this looks unlikely at the moment.

Dow Jones

Crude Oil creates a Bullish pattern

A late rally lifted the price of crude oil higher to close the week on a positive note at $93.11 and this is likely to continue higher this week. The weekly chart sports a Bullish pattern but will require a move above last week’s high of $93.55 to then move forward towards $96.30 as the next objective. What is important to remember is that the weekly chart still has a longer term Bearish momentum intact even with the current swing, which may turn out to be a corrective rally against the decline from the $111.30 high. If this is correct then fairly soon oil may reach a wall of resistance.

Crude Oil