FTSE 100: Springing from Trend-line, Recent Range
- The FTSE 100 holds trend-line support
- Looking to break the recent malaise and trade towards overhead levels
- If nothing else, support levels will keep short trades at bay
The FTSE 100 has been choppy over the past week, but if buyers at trend support can continue to keep today’s early push going, we may see the UK index gain some ground and play a little catch-up with other global indices.
This is what we had to say on Friday (bolded part new), “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).” And that it has been so far, difficult to be a short. Being a buyer hasn’t been much more fun, either, but it hasn’t been costly.
It’s the simple stuff in technical analysis which is often times the most useful. Even if you didn’t get long at the trend-line (price action wasn’t the most encouraging), ‘unnecessary’ losses on shorts could have been avoided.
Back to the situation at hand…
If the FTSE can maintain a bid it has a little room to run before it will run aground. There is a pretty good zone of resistance in the ~6955/12 vicinity (runs back to the August swing high). Additionally, a trend-line running down off records highs will come into play somewhere in the same area as our horizontal levels.
Support comes in at recent daily lows spanning from 6709 down to the important 11/4 swing low at 6676. The June trend-line is of course one of our primary focuses, along with the low trajectory trend-line extending back to the 8/4 low.
We’ve previously discussed a ‘head-and-shoulders’ top potentially coming into play should the 'right shoulder' fill out some more. But we will reserve any further observations until/if it becomes a relevant scenario.
For now, if today’s gains can hold, the FTSE may finally find some momentum following the recent malaise and move towards previously mentioned resistance levels. This would be good for short-term long positions, and if nothing else keep short-term shorts at bay. A reversal back lower wouldn’t be very encouraging for longs, but we must still respect support until broken.
FTSE 100: Daily
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinonFX.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.