Sharp rally negate bearish reversals but facing resistance

<p>The late rally seen towards the end of last week have seen markets turnaround from a bearish reversal to which now seems to be in […]</p>

The late rally seen towards the end of last week have seen markets turnaround from a bearish reversal to which now seems to be in a bullish reversal mode. This is not the first time this has happened in recent weeks. Previously during the month of June the same scenario occurred where we witnessed a trend reversal to the downside only to be cancelled out and then experienced a move towards the upside into a wall of resistance. Currently even though we have seen two days of a move higher the markets will need to overcome resistance barriers again to confirm that this is a bullish move rather than a false reversal. See key levels below:  

FTSE 100 back above 5595

Even though the UK FTSE 100 index has turned bullish based on Friday’s move, the start of this week will need to see a follow through. Once the index breaks above 5631 it will then need to sustain the move and aim for 5700 where the index faced a struggle to overcome the resistance barrier. If cleared then the road could be paved towards the 5775 – 5825 level where it will once again need to prove that the strength will be able to move forward. Now that momentum has turned positive the bears will need to take the index below 5475 and 5400 to take control and bring the index lower again.

FTSE 100

Dow Jones finally reaches 13060

For several weeks I mentioned that there is a possibility for the Dow Jones to see 13060. However the early part of last week started to show signs of weakness by creating reversal patterns at 12835 and also providing divergence signals that indicated the Dow Jones would be heading lower. But the late unexpected turnaround has once again placed the index in a position to move higher. If the index does indeed follow through then the obstacle to climb will be at 13190 followed by the 13338 high. If a summer rally commences it will need plenty of thrusts to lift this market higher and not just a few days of steam.

Dow Jones


Crude Oil may be back on track for $100

The longer term trend for Crude Oil has been bearish. But the recent move from late June has lifted the commodity from a low of $81.46 towards $94.64 and looks as if there may be more room left for higher prices. Oil will need to maintain a firm hold above $80.80 and for the short term it will also need to stay above $89.00 to stay on track for higher prices. Once Oil reaches $92.80 and can close above this level for three days it will then require a move above $96.00 followed by $100.00 per barrel. Breaking below $89.00 would not be good and likely to take oil back towards $80.00 and lower in the coming weeks.


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.