FTSE 100 Technical Analysis: Following Through on Early Week Reversal
- FTSE 100 following through on failed breakout, reversal day
- Sinking into support, 6149 the floor before…
- The door could get opened for a move towards 6050
The last time we discussed the FTSE 100, we pointed out its inability on Tuesday to sustain its gains once it had broken out above prior resistance around the 6275/300 area. The subsequent intra-day reversal led to the formation of a classic bearish bar-type frequently referred to as a ‘pin bar’. Call it whatever you like, it was bearish; especially since it constituted a failed attempt to capture higher ground above known resistance.
The day following the reversal event the market rebounded, but was unable to recapture the prior day’s reversal, giving traders an opportunity for better pricing on shorts and stop placement above the Tuesday high of 6324. On Thursday, the FTSE sold off as anticipated by dropping a little over 1%.
So where are we now? The FTSE futures are currently sinking below the support zone between roughly 6200 and 6175, nearing the 6/1 low at 6149. The market is still generally range-bound, not just in the UK where uncertainty remains over the EU vote, but across major global equity markets. Not long ago we noted that we believed we might be seeing another range etch itself out at higher levels from the range created in May. However, if 6149 breaks with momentum then we look for selling to take the FTSE down to an even larger area of support around the 6050 level.
FTSE 100 Daily
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.