What’s inside:
- A question we recently answered may be in the process of being answered
- Failed breakout, daily reversal bar to lead to lower prices
- Range-bound market becoming likely until the EU vote
This was the question we asked on Friday, “lower high or higher low?”, and yesterday with the FTSE 100 unable to hold a breakout, the answer to our question may be, “neither”.
From yesterday’s commentary: “If the market fails to hold onto today's rally and sinks back well below 6300, then a higher level range could be developing from the one we saw dominate through much of May. A failed rally would also likely create a bearish daily reversal bar.”
Indeed, that is exactly what we saw yesterday – a bearish daily reversal bar ('pin bar'). Today, thus far we are seeing the FTSE 100 up small early on, but expect yesterday’s price action to lead to a move lower in the next few days.
There is support between 6230 and 6200, with the 6/1 swing low at 6149 as the next level of significant support. As long as the spike day high (6323) keeps a lid on the market, we expect the market to be range-bound, with weakness unfolding in the very near-term.
FTSE 100 Daily
A range-bound UK stock market and currency as the next two weeks up to the EU referendum makes sense on this end as the pendulum swings from ‘stay’ to ‘leave’ within its own slight range at this time; its marginal between the two sides according to the polls, which aren’t necessarily all that reliable. No-one really knows at this juncture, and with that we are seeing that indecision in the marketplace.
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
