Weakness in Dow Jones but not for FTSE 100

We expected weakness to continue and so far the Dow Jones has played to a tune but the FTSE 100 has held onto strength. If the indices are to continue lower then momentum really needs to follow through. But the Dow Jones may be at a short term low and move higher briefly lifting the UK markets along the way. However the real key is how much higher these markets can move. If weakness continues by the end of this week then we could be in full swing bearish territory by next week. Gold has fallen to the downside again in line with the bearish signals provided earlier. See key levels below:

FTSE 100 in consolidation mode

So far the index has not shown signs of a bearish momentum reversal. Although the FTSE 100 has reacted at the 5700 resistance barrier what is really required a continuation to the downside by now breaking below 5600. For upside moves the 5695 should be taken out. Until either of these two levels have been cleared we could be sitting in a consolidation phase. Ideally a bearish move lower should occur given that the 5700 level has been a hurdle. If the FTSE 100 does trickle down then the 5595 level may provide very short term support.

FTSE 100

Dow follows through lower

Having broken below 12700 the Dow Jones has clearly shown weakness is apparent. We also now have a bearish momentum reversal signal occur after Tuesday’s sharp decline. Wednesday will need to trade below 12606 to ensure that the bearish trend is going to continue. If the index fails and moves above the high of 12829 then the signal would not be valid. There is also the possibility that the Dow Jones could head higher to complete a five wave reversal pattern at 13060 before the expected move to the downside occurs. A break above or below Tuesdays levels should provide further information.

Dow Jones

Gold weakens again confirming weakness

Now that Gold has fallen $1,576 the metal is likely to test the lower boundary of $1,547 fairly soon. As discussed previously the commodity is range bound until we see very clear breakouts of the recent channels. But if the bearish momentum continues then most likely the objective of play will be for Gold to see $1,485 over the coming weeks. It really will require a complete trend reversal by seeing a thrust above the $1,607 resistance level and then move towards $1,677. This commodity will require patience for another week or two before it resolves the current pattern breakout.

Gold