FTSE 100 Tech Update: Trades at Crossroads
- The FTSE trades at confluence of resistance
- Market generally postured more bull than bear, watching how any retracement unfolds
- Tactical considerations for longs and shorts
The push higher in the FTSE 100 continues, with the index pitting itself up against a crossroads of resistance around the 6880 mark. On Tuesday, we only penciled in the top-side trend-line off the 8/15 peak, not including a trend-line broken earlier in the month. (It’s been added.) The confluence of differing angled resistance makes for a challenging hurdle to overcome on the initial approach given the sharp rise already experienced over the past week or so.
At this time, the surge higher and generally buoyant global risk appetite suggests any decline which unfolds from resistance will turn out be nothing more than a pullback. It’s possible we are looking at a second lower higher, which could carve itself out as soon as today, but that is looking like the more remote likelihood at this time.
How any decline unfolds, as we said on Tuesday, is where our interest lies in determining whether it’s a pullback or a bearish progression of a lower high, lower high sequence developing since 8/15.
As ‘they’ say, much is to be learned in the retracement.
If little to no retracement ensues, additional resistance lies not far ahead at 6926 and the August high of 6956. If the market is to cruise on to new heights soon, a pullback taking the FTSE no lower than the mid-6700s would offer a healthy reload for the market to gain the power to push on through to and above the 7k mark.
Tactically, those who have been riding the wave higher may look to resistance as a spot to exit or take partial profits, or implement a trailing stop on all or part of their position. For would-be shorts this area offers an attractive spot to sell with the two converging lines of resistance likely to act as a backstop for now; stop placement above the swing high once momentum turns lower.
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---Written by Paul Robinson, Market Analyst
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