FTSE 100 Trading Heavy at Support
- The FTSE 100 trading at trend-line support
- Looking like it wants to break, but need to see support give-way before becoming sellers
- If support holds, more time could allow for an H&S formation to develop
Since our last post on Wednesday, the FTSE 100 hasn’t done a whole lot to take note of. It continues to hold trend-line support rising up from the June lows. This is the first significant line of support we have penciled in. A decline below won’t be an all clear for shorts just yet, though. There is the 11/4 swing low at 6676 and trend-line running back to 8/4 (both in the same vicinity). As discussed, the other day, with a little more time a more symmetrical looking 'head-and-shoulders' pattern could evolve, with the 'left shoulder' and 'head' already in place. We’re just waiting for the 'right shoulder' to develop a bit more, and of course we would then need a break of the 'neckline' (8/4 trend-line) for pattern confirmation. More on this later should it become relevant...
The response off trend support has thus far been rather tepid, but if buyers can be found the FTSE could find itself back up against the 6955/18 zone and trend-line running lower off the record highs. That would certainly pique our interest as sellers.
Given how heavily the FTSE is trading on trend support and how severely it is underperforming other European indices, Asia, and the U.S., a push lower is looking increasingly likely. However, we must respect support until broken. While the market isn’t showing a great deal of interest in owning the 100, shorting support is an unfavorable proposition (as is buying resistance). Would-be shorts will likely be best served waiting for support to give-way first. For those looking to take on a long or already own contracts, the 'line-in-the-sand' has been defined.
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.