Will the current resistance levels push markets lower?

<p>It has been a rollercoaster week for the stock indices as we have seen markets testing both the upper and lower boundaries. What was apparent […]</p>

It has been a rollercoaster week for the stock indices as we have seen markets testing both the upper and lower boundaries. What was apparent earlier this week was that the indices were unable to hold onto positive momentum by the closing sessions. This indicates weakness and lack of conviction for traders who want to hold onto intraday long positions. We have seen the resistance levels being tested but not cleared and this may suggest that if we don’t see a move above the levels then a move to the downside could become more serious into next week’s trading session. See key levels below:

FTSE 100 will need to stay above 5830
By the close of today’s trading session the FTSE 100 will need to hold above 5830. Ideally the index should clear 5900 to reach for the 6000 level and with the turnaround in the US session after the close of the UK session yesterday we may see some potential. We did see a potential momentum trend reversal on Wednesday but there was no follow through. However, this does now increase the potential for a bearish play if the index does not lift higher immediately. Next week the FTSE 100 must remain above 5750 to prevent the index falling lower towards 5630.

 

Dow Jones late rally brings hope
Thursday saw a great trading session for the intraday traders with excellent trading opportunities in a 109 point day where the index went from positive to negative and ended up closing near the highs. Trading below 13550 has now placed the index in a position where it may challenge the lower 13338 level next week. The Dow Jones would need to move above 13620 in order to negate the short term bearish view. We have not seen signs of a bearish momentum reversal as seen on the FTSE 100 but both indices appear to be in similar positions where sharp moves to the upside are required to keep on the bullish side.

 

Gold setting the stage for $1,840
Having broken below $1,750 this week the price of gold managed to reverse the bearish trigger to now turn bullish again and also close above $1,770 to prove that the metal still has legs to carry it higher. The upside objective at $1,840 looks likely over the next week or two as long as Gold now remains firmly above $1,750 otherwise we may see more volatility as it tries to ascertain the short term direction. This is typical at resistance levels and the current price action is in line with expectations. The bullish momentum still remains intact and once the metal has reached $1,840 we could then target the $2,000 level.

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