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Dow Jones bullish if support levels are held

Article By: ,  Financial Analyst
October 15, 2012 12:00 PM

The weakness set in last week as stock indices headed lower after failing to break above the key resistance levels. We did see the support levels being reached and also momentum turning bearish. Currently the markets appear to be stuck within a range and also overextended to the downside on a very short time basis. This would suggest a move to the upside this week but back into a range bound bracket. If the markets can hold support for longer than a week then this would be a good sign for the bulls otherwise a resumption of the recent bearish move could continue to the downside. See key levels below:

FTSE 100 reaches support target
Last week the target for the downside had been 5765. The actual low of 5766 has seen the index bounce higher but back towards the resistance target of 5830 again. It seems that the index will need to either swiftly move higher above 5900 to prove that the bullish momentum has regained control otherwise the FTSE 100 may turn south and break below 5765 to reach for 5700. Several times over the last few weeks the index had provide short term trend reversals. But so far no follow through has transpired. This week we would need a clear decision by breaking out of the 5900 – 5765 range.

Dow Jones turned bearish but at support
The US Dow Jones index has turned bearish on a momentum basis. The index failed to get above 13700 with a high so far at 13661. We also saw the index reach the lower target of 13338 and it appears that we may see a move higher this week. For the bullish move the index would need to hold support and target the upside level of 13500. First it would need to break above 13400 to achieve this target. Traders would need to see the 13300 level hold for this scenario to take place. A break below 13300 could lead the way to the lower target of 13060 over the coming weeks of October.

Crude Oil still bearish on weekly charts
After reaching the upside target of $100 once Crude Oil cleared $96.30 the commodity had turned bearish. The wide range move to the downside has led the commodity towards $89.00 but so far the target has not been reached. Currently the price of Oil remains under $96.30 which should prove to be a resistance level and momentum is bearish which indicates that the coming weeks ahead should see lower prices for Oil. To turn bullish we would need to see a move above $95.70 – $96.30 and then of course the $100 level to then reach for $106 but it is important that oil holds above $89.00 to see this outcome.

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