What’s inside:
- Possible higher low developing
- 6200 to 6250 area of important influence
- Markets don’t like uncertainty, momentum in either direction unlikely
After a couple of days of selling on ‘Brexit’ fears and then the anti-climactic ECB meeting yesterday, the FTSE 100 finds itself relatively unchanged for the week.
The index is trading in the 6200 to 6250 area which has been a point of contention between both sides of the market since the end of February. The past day-and-a-half the FTSE is attempting to make good on a possible higher low above the multiple May bottoms created near 6050. This development comes from smack in the middle of a range which has only been briefly broken to the upside on two occasions in the past couple of months.
If a firm overtaking of the mid-6200s can not be sustained soon, then it would be reasonable to conclude that the FTSE will roll back down towards the bottom end of the multi-month range near 6050. In this instance a lower high would develop.
If, however, further gains can be maintained back between 6250 and the Tuesday high at 6291, then the critical lower zone between 6200 to 6250 area could become support again and a breakout above the week high may be able to take shape. We will need to keep an eye on how the market responds to the trend-line off the April high should it reach it. (Not viewed as signficant resistance at this time.)
FTSE (UK100) Daily
Created in Marketscope II
Uncertainty regarding the upcoming vote is set to make the trading environment less than ideal (it already has) and expectations of seeing momentum kick in on either side of the tape continue to be tempered; especially to the upside. If there is one certainty, it is that markets don’t like uncertainty. This sentiment has us inclined to believe any trade to the upside is likely to be short-lived (even if other global indices continue higher).
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX, and/or email him directly at instructor@dailyfx.com.
