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UK100 awaits BOE decision for breakout

UK100 awaits BOE decision for breakout

Walker England, Forex Trading Instructor

The UK100 (FTSE) Index has continued its yearly stall, yet again failing to break new highs. Resistance is now firmly planted at 6,108 with the yearly high established on February 9th. Since this time, price has made a series of lower highs, indicating that purveyors of a bull run are being sidelined. Price is currently consolidating, allowing breakout traders a chance to catch fresh downward momentum

This week has been devastating for multiple stock markets across the globe. There is increasing fear across the board, however the UK100 has stood firm only moving 2.3% lower on the week. Next week we have the Bank of England (BOE) rate decision on the economic calendar for Thursday. This event may be the catalyst the market has been waiting for to find new direction in UK shares trading.

Price Action

Moving to a 4H chart, price is congesting in a classical triangle , trading between support and resistance. Currently price is making a move on support, residing at the 5,791 point. Resistance is firmly overhead at 5,898, drawn by matching up the highs from July 8th and 22nd. As price moves between these two points, traders can wait patiently anticipating a breakout with the trend.

Trading Opportunity

My preference is to sell the UK100 on a breakout of support on. Look to place entrys under support near 5,733. Stops should be placed at 5,850 or better. Limits should target a breakout to new lows at 5,500 or better, setting up f a clear 1:2 Risk/Reward ratios.

Alternative scenarios include price continuing to trade between our triangle lines.

Walker England contributes to the Instructor Trading Tips articles. To receive more timely notifications on his reports, email instructor@dailyfx.com to be added to the distribution list.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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