Markets close higher but is this bullish for next week

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.

07/10/2011, Sandy Jadeja, Chief Technical Analyst, City Index 

Markets close higher but is this bullish for next week?

Starting the week on a negative note the stock indices seem to have managed to put in some nice gains this week. However is it time to turn bullish or are we seeing a false move to the upside again? Given the strength so far there should still be some caution into next week as we are seeing some potential reversal patterns develop as the UK FTSE 100 approaches closing time. Gold prices have also not been able to gather strength to lift the commodity much higher. There is some cause for concern here too unless momentum picks up quickly. Key price levels are provided below:

FTSE 100 possibly turning bullish

The 5050 – 5015 support level has managed to help the FTSE 100 stay positive. The opportunity to tackle 5445 once again is on the cards and the index has also seen a positive momentum turn take place. The Blue bars suggest that higher prices could develop next week as long as the index stays above 5102 but Friday’s pattern suggests that the recent move up may be uncertain. If Monday breaks below 5250 then the sideways pattern is back in play. It is frustrating to see choppy price action but a breakout is well overdue and will point to the next intermediate term direction.

FTSE 100 Daily

Dow Jones respects the 10430 level

Although the 10430 level thrusted the Dow Jones higher the index has not yet confirmed a bullish momentum turn yet. If Friday closes with just minor gains then we could follow this move down into next week’s trading. The Dow will need to hold above 10855 if there is going to be any chance of attempting to break above the key resistance of 11472. Next week will need to see the index not only clear 11472 but also the recent high of 11712 to help overcome a seasonal bearish October. But the intermediate term trend still remains bearish and sudden moves to the downside cannot be ruled out.

Dow Jones Daily

Gold prices negate early losses

Gold prices fell early this week but has seen a recovery into the close of this week. On a short term basis we still have no real evidence of strength for higher prices. Going into next week the price of Gold will need to clear $1,680 and try to get back above $1,720 which is in line with the 20 period Moving Average. Currently the $1,575 level has sustained the commodity but on a pattern basis we still have a consolidation between $1,680 – $1,575 which needs to be resolved. Until this takes place Gold may remain weak below the $1,700 level.

Gold Daily