FTSE 100 Tech Update: Trading Levels, Pattern Potential
- The FTSE 100 is holding on to two trend-lines of varying degrees
- Bounce looking corrective so far, potential big picture pattern forming
- Support and resistance outlined
The last time we looked at the FTSE 100 it had just ripped 300 points, with US presidential election-induced volatility causing large gyrations in global financial markets. The rip took the market back to the trend-line off the 10/11 record highs. At the time, we noted that “shorts look more attractive at overhead levels.” That turned out to be an understatement as the FTSE reversed nearly all of its gains in less than two days. The drop took it back to developing trend-line support off the mid-June lows (‘Brexit included). So far we have seen a bounce develop from rising support, but thus far it hasn’t been very inspiring. The feeble nature of the bounce has a corrective feel about it given the nasty decline proceeding it and overall trend since notching out record highs last month.
If the UK index should find good sponsorship, we will look to the 6955/18 zone and the trend-line off the October highs as resistance should the FTSE be so inclined to rise that high. The two technical events could coincide for further reinforcement of one another.
Support continues with the June trend-line. Should this give way, a low-angled trend-line running back to the 8/4 swing low will come into play along with the 11/4 swing low at 6676. A break below both the t-line and price support will be significant and likely usher in a decent amount of selling.
If support holds, with a little more time, a head-and-shoulders top could unfold; the ‘left shoulder’ coming in at the August peak, the ‘head’ at the October peak, and the recent spike high marking the ‘right shoulder’. The trend-line extending back to August would then act as the ‘neckline’. But before we go getting too imaginative, we need to see more price action before this scenario can become reality.
For now, we will operate off the levels and lines above and below until we see evidence emerge suggesting to a sustainable trend about to develop.
FTSE 100: Daily
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---Written by Paul Robinson, Market Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.