Spread Betting Rallies Could Lift Indices Higher For the Short Term

Posted on | September 6, 2010 |

After the recent decline and a reversal it appears that the Bulls may be about to charge further as momentum gathers to the upside.

The indices reached the downside targets as expected and found support at intermediate levels. The reversal has shown strength on two timeframes that may be pointing to further upside moves if positive momentum continues for the week ahead.

FTSE finds support at 5105 level

After reaching the support level of 5105 with a low in at 5080, the FTSE 100 index has managed to gain +7% from this pivot low. Currently the index is at a resistance level of 5435 and will need to sustain this level if higher prices are in store. We have 5510 as the next price target with key resistance at 5610 – 5627.

For the short term, the spread betting index must stay above 5340 otherwise a retracement towards 5300 – 5270 could be revisited. Importantly the momentum index has registered a Bullish reversal supporting higher moves for the very short term. The monthly charts remain bearish.

Dow Jones reverses off 10035 level

With the downside move completed the Dow Jones now may be in the first stage of an ABC correction to the upside.

A five wave move at the 10035 level has propelled the index higher which may suggest that the 10630 level could be re-tested.

As long as the index stays above 10250 for the short term then the odds increase for bullish momentum to continue. With the Dow above its 20 day Moving Average and a Bullish Momentum signal the short term and the intermediate time frames are now in bullish modes again.

However after an ABC correction the bears may be back with a vengeance.

Silver heads higher towards initial resistance

The metals have had a nice run over the last few weeks and with traders focusing on the popular Gold contracts, Silver has shown a greater increase in strength.

The September contract is now almost at its first initial price target of $20.10 as long as it remains above $19.30 with the possibility of reaching even higher towards $20.84 and technical indicators favour further bullish price action in the weeks to come.

The concern is that the commodity may still be range bound if we see a retreat below $19.30 and more importantly below $18.93 but volatility is expected to remain with Silver prices over the next week.

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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