Up down, up down as the see-saw for the equity markets continues. 

The Dow managed to put in a half decent gain last night and Asian indices complimented that overnight so European indices are just about in the black.  Once again however we had been calling the FTSE to open much higher with our quote getting to 5500 at one point in the early hours then slowly but surely we drifted back from there. At the time of writing the FTSE is just a little higher to 5455 so hardly a convincing move from the buyers.

For the index the 5400 level remains the critical support area of the moment.  The hourly chart shows a double bottom has formed just below here at almost exactly the same level and so from a technical point of view at least this is an area buyers are coming back in to. This isn’t to say that it will hold going forward and higher prices are to come, as we’ve seen in the past many of the recent rallies have been very short lived.  What it probably does mean is that a break to the downside and close below here could spell trouble for the bulls. Something will have to trigger this move of course and with so much uncertainty out there at the moment you could almost take your pick as to what that trigger might be.

Lots of moves on the political stages of Greece and Italy and so for now the markets seem to be giving the eurozone another benefit of the doubt.  A heavyweight ex EU commissioner is expected to get the top spot in Italy and Greece has finally picked someone to lead after days without a prime minister.  Hopefully this puts a bit of clear blue water between the politicians and the markets, but more important today is the votes on Italian economic reform.

Of course passing austerity packages is all very well, but that doesn’t do much to help growth which is fast becoming the real worry for investors.  Throughout the last few months downgrade after downgrade has been made to European, US and even Chinese GDP with the chance of recessions becoming very real.  As a result bullish clients of indices are few and far between as on the whole they are only slightly long on Europe (FTSE and Dax) and slightly short on the US indices.

The euro has managed to find a little bit of support around these levels and is at 1.3640 at the time of writing.  Traders are still very wary of the single currency following the sharp sell off recently and increased volatility in the FX markets.  Clients have been sticking with a bearish view of the euro which is not what they usually do when a market is trending lower, often they oppose the trend but this time they feel EUR/USD could go lower following the recent small bounce.  Support and resistance for the pair is seen at 1.3500/1.3460 and 1.3700/50 respectively.

The recent euro weakness has given GBP/EUR a boost taking it up above 1.1700 where once again it has run out of momentum.  The little bounce in the euro has brought us back down to 1.1670 at the time of writing, so will history repeat itself and bring this pair back lower again?

Gold has spent the last couple of days oscillating following its little correction.  Bullish clients have been attracted into buying at these levels no doubt expecting a retest of 1800 and at the time of writing we’re at 1766.  The precious metal probably needs a trigger to get back up there, rather like the trigger mentioned above that would send us the next leg lower if it came, so all eyes are on progress with today’s votes in Italy and we'll see if that’s the trigger that will spark the next bout of volatility.

Brent has also been clawing back some of the mild losses of recent days, which as mentioned earlier this week had broken out to the upside causing many bulls to get excited that this was the next leg higher.  For now the bulls are biding their time with Brent trading just higher at 114.10.