Resistance levels reached successfully but require caution

<p>Our upside expectations have been met successfully, with markets now at decision levels once again. We have seen the bullish momentum continue into last week’s […]</p>

Our upside expectations have been met successfully, with markets now at decision levels once again. We have seen the bullish momentum continue into last week’s trading session but this week may require a little caution. After reaching the above resistance levels, we did see the stock indices pull back to almost where they had started. This suggests that the upside may start to see some weakness for this week ahead. There is also a potential for a major trend reversal at hand. Gold prices also reached our expected upside levels but are currently looking a little weak and may pull back lower before the upside trend resumes. Key price levels are provided below:

FTSE 100 may pull back lower

If the FTSE 100 fails to climb higher this week then the index may be looking to fall lower. We notice that the index is starting to fail at holding onto intraday high prices. Typically a market shows early warning signals by creating both chart patterns coupled with bar signals. Some global indices are already showing their hands and the UK Index may be part of several indices that could see a correction take place. If the FTSE falls below 5580 then 5480 should provide support. It would require a move above 5725 to negate short term bearishness and tackle the 5820 target this week.

FTSE 100 Daily
FTSE 100 Daily

Dow Jones in-between key levels

The Dow Jones has now found itself stuck in-between two levels at 12350 – 12545 where it will need to breakout from to determine its next move. If the index fails at 12350 support and, more importantly, trades below 12300 then the lower level of support at 12130 could kick in. The trend remains bullish until we see red bars. We remain on bullish ground until momentum weakens and sees range expansion to the downside. The concern is also that a potential 5-wave pattern may be completing at current levels indicating that the move up may be in its final stages before a correction commences.

FTSE 100 Daily
FTSE 100 Daily

Gold reaches upside target

So far gold has played out nicely to see the upside level reached as previously suggested. However the appearance of a Red Bar now indicates that if we see gold trade below $1640 then the commodity may start to trade to the downside and seek support at $1575 again. This remains a key support level for now and also could see a reverse Head and Shoulder pattern in the making. For the Bulls, the price of gold will need to get above $1680 to reach for the $1785 level and possibly even higher levels depending on how much momentum can be gained over the coming weeks.

FTSE 100 Daily
FTSE 100 Daily

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.