Crude Oil and Indices Spread Betting Markets Continue to Fall

Posted on | August 25, 2010 |

As expected the markets fell lower reaching initial support bases. With three time frames showing bearish signals the markets may be in a position for further declines.

Although short term momentum appears to be reaching a possible reversal for 1-2 days, we cannot rule out the option for a continuation to the downside. With both momentum and chart patterns indicating that bears are in control, the bulls may have a tough time ahead over the next week.

FTSE 100 falls towards the 5178 level

The FTSE 100 declined to the initial 5178 level where we may see support for the short term. However with weekly and daily charts now confirming a bearish move to the downside is in progress the 5104 support level may become the next price target. In order to negate this view the index will need to climb above 5340 to test the all important 5435 resistance level.

We note that the momentum index has now also posted a bearish signal supporting the case for further declines. Unless a sharp reversal takes place immediately the bears may have the upper hand.

Dow Jones at initial support level

With a five wave pattern completed to the upside the move lower extended into last week’s trading. In spread betting, the index is currently at the 10106 level where we may see a short term bounce.

The 10415 level needs to be cleared in order for the index to reach higher. But momentum indicators have now also confirmed that we could see the key 10,000 level being tested. The Dow is also below its 20 day Moving Average supporting the case for bearish moves. Overall the index still appears to be in a larger degree range bound pattern. A break above 10415 or below 10167 should determine the next move.

Crude Oil falls back towards channel base

As noted previously, Nymex Crude Oil failed to hold above $80 and with a Technical bearish pattern on the Stochastic Indicator a move to the downside was expected. Following through on this basis Oil is now back near its channel base around the $69 - $72 level.

Currently the commodity may find support at $74 or if weakness continues then lower support comes in at the$68.35 level. We may see further range bound moves in oil between the $68 - $80 range until the commodity proves otherwise. Stochastic indicator is now at lower levels suggesting a move high for the short term may be possible.

Please remember that Spread Betting and CFD Trading are leveraged products that carry a high level of risk to your capital and can result in losses that could quickly exceed your initial outlay. These products may not be suitable for everyone, so please make sure you fully understand the risks involved.

Spread Betting and CFD comments by Sandy Jadeja, Chief Technical Analyst, City Index.

The above should not be construed in any circumstances as a recommendation or offer to sell or recommendation or solicitation of any offer to buy any security or other financial instrument.

Neither City Index not Spread-Betting.org warrant or represent that the material is accurate, complete, not misleading, or fit for the purpose which it is intended and it should not be relied upon as such.

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