Will markets hold support this week or continue lower

Sandy Jadeja, Chief Technical Analyst at City Index, analyses the market to identify key technical levels for major commodities and indices markets including the FTSE 100 and Dow Jones this week.

• After a sharp third wave move lower, stock indices are set to see a counter-trend rally. But traders should be aware that even if we see a sharp move higher the current pattern suggests that there is another swing lower ahead. The trend has been confirmed lower on Daily charts and also the Weekly charts, however we now have seen the Monthly charts turning bearish too. The month of June will be important which will prove how much further stock indices have to fall. With Gold prices also taking a fall the rebound may also see a wall ahead before reversing back to the downside.See key levels below:  

  FTSE 100 reaches lower targets

  The UK FTSE 100 has fallen to reach its lower target of 5288 with a low of 5253 as a possible low. The question on traders’ minds is if this will mark a short term or intermediate term low. Depending on how the wave formations take place for the upside move, we may just see a consolidated move which could take two weeks before further selling pressure takes place. With the downtrend clearly in place, it is probable that the index is on target to reach lower boundaries in the months ahead. Key levels are now at 5045 followed by 4470 as lower objectives. Upside resistance stands at 5410 – 5540 for now.

  FTSE 100 Daily
  

  Dow Jones breaks below key level 12700

  After breaking the key support level of 12700, the US Dow Jones stayed on route for the lower 12270 target but has not yet reached base. But if we see a strong opening this week the index may be inline for a move higher but only to face further selling pressure at higher resistance levels. The 12700 support level is now most probably to turn into a resistance level. Above this area we have a maximum target of 12950 in case the move higher gains strength. The Dow Jones is likely to see 12220 – 11870 as a minimum downside target on an intermediate term basis.

  Dow Jones Daily
  

   

  Gold trading reaches $1530 support level

  As expected the price of Gold reached the $1530 target and has so far seen a move higher. With the trend being bearish since the break below $1708 the most probable price that Gold may reach in the coming weeks is $1465 if the bearish trend continues. It would require a clearance above $1630 – $1675 for a Bullish trend to commence. After seeing a consolidation base at $1630 this level may now prove to become resistance which could also be a tough barrier to overcome. If stock indices collapse, Gold may then become favourable as an alternative again.

  Gold Daily