FTSE 100 Tech Update: Tunneling Towards a Resolution
- The FTSE 100 continues to trade within tight confines of descending channel/bull-flag
- Trading conditions remain difficult for traders operating on all time-frames
- Waiting for a break of the top-side trend-line or recent swing low for indications
On Tuesday, we went over the bull-flag development building in the FTSE 100, and coming out of the Monday holiday in the UK it looked as though it was going to break out, but by day’s end that was not to be the case. Instead, rather, the UK index continues to tread within the very tight confines of the upper and lower parallels running off the mid-August highs.
This doesn’t make for great trading conditions for anyone – whether you are a swing trader or a day-trader. Global equity markets for the most part have been very quiet and choppy (especially U.S. markets), with summer trading conditions taken to the extreme. Fortunately, those days are nearing an end as the fall is closing in quickly, and generally holds some pretty good opportunities, regardless of the asset class. (FX has been the place of opportunity as of late).
Getting back to the FTSE chart: The narrow descending channel (bull-flag) is sitting on a rising parallel running back to just a few days following the ‘Brexit’ outcome, along with horizontal support from the July high (also August ’15 swing high). This makes now a very pivotal point in time. Not much room before one side or the other needs to give here.
We’re still waiting for the break. The trend remains pointed higher since the June 24 spike low, and thus far the gradual pullback (bull-flag) into support is a constructive development. A good closing break above the top-side t-line should continue the trend higher. A close below the 6763 low created on Wednesday will rattle the cages a bit and be cause to start considering bearish alternatives. Would still require a break below the lower parallel, too, to strengthen bearish case.
Follow trader sentiment in real-time via the DailyFX ‘Speculative Sentiment Index’.
---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX.