As I write this we are in a fairly steady bull trend since the start of the trading year for the FTSE 100 and with the bulls breaking and holding above 7200 on Friday, its holding up, despite looking toppy. The reason I say that is that we have a daily RSI reading of 85, and whilst this can remain overbought (or oversold) for a while, while the markets move higher or lower, eventually it will drop. I mentioned in my 2017 Outlook Post that 7250 was looking like a decent resistance level and that has formed as the top of the daily channels for today, with both the 10 day and 20 day showing that area as resistance.
To start the week I can see gold holding its lower support area at around 1170 and moving higher which might well tally with a downturn in the indices this week. Ideally I am looking for a move down on the FTSE 100 to the 7060 area where upon a decent swing long entry presents itself. This could then see a rise towards 7350, if the bulls were able to break a potential double top at 7250.
On the flip side, the bears have been arresting the rises recently, thus slowing the move higher. If the market is to fall from the 7250 area then initial support is 7180 where we have the bottom of the 20 day channel. Below this then 7100 is viable, with the 7060 looming into view at that point.