London, England -- (SBWIRE) --05/12/2011 -- The sharp declines in last week’s indices and also commodities has spooked the bulls and has seen the markets drop lower into initial support areas. The concern amongst many traders is whether this pullback is a correction or the start of a larger degree decline. Taking both the current price action and price patterns in consideration it would require another swing to provide further clues in order to determine the intermediate term outlook. If the swing is to the upside then this recent decline would be considered a correction whereas a swing failure could potentially lead to a further sell-off.

FTSE 100 retreats from 6117 level

Once again the FTSE 100 index has failed at the 6117 resistance level. With last week’s decline the index had also dipped below the 20 day Moving Average but the momentum index had not declined low enough to trigger a key reversal signal. Currently the index sports a “Double Top” pattern at the 6100 level which in itself could be a potential warning that there could be further declines ahead if the index is unable to clear this area. This week the FTSE should be looking for support at the 5850 level with upside targets coming in at 6000 – 6045.

Dow Jones unable to clear upside barrier

The pullback on the US Dow Jones has seen the index fall back to find support at its 20 Day Moving Average and also forming a Daily Pivot Reversal. The index will now need to prove that it can hold above 12093 if it is going to tackle the 13270 level. If we see a failure to take out 12876 then the index could face a further decline down towards the 12400 level once the 12670 level has been broken. However the overall pattern formation appears to be more bullish on the Dow Jones compared to the UK FTSE 100 index.

Gold completes initial correction

Although Gold prices fell sharply along with other commodities there is a possibility that this may be a simple pullback. Gold will need to stabilise at $1520 -$1447 and see a weekly close in positive territory for the week ahead. The Weekly chart has seen the metal break below key pivots which could cause concern for the bulls. This week Gold may look towards higher prices into resistance levels at $1519 - $1533. If strength comes into play then the $1552 could be the upper price target.

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