FTSE 100 Rips from Big Support to Big Resistance
- The FTSE 100 rips alongside other global markets
- Recaptures June trend-line in the process
- Major resistance zone in 6917/55 vicinity
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The FTSE 100 ripped yesterday in a manner which we haven’t seen since the early days of September, rising 1.8% to join other global markets in what turned out to be a big past couple of days. During the past two sessions, we saw significant breakouts in the CAC and DAX, while major U.S. indices continue to notch out new record highs. Overnight, the Nikkei 225 responded to yesterday’s full-on risk-on trade, rising to its best closing levels of the year.
The FTSE began the current leg up after a test and rejection of neckline support (8/4 trend-line) and the 11/4 low. The initial lack of enthusiasm at support seemed to be setting the index up for an eventual breakdown out of the ‘head-and-shoulders’ pattern. Technically, the pattern is still a possibility with the right shoulder still intact, but with global appetite for stocks as strong as it is, it’s unlikely the FTSE will trade sharply lower at this time. It may struggle to rise as the UK faces significant headwinds from Brexit, but until we see general risk sentiment cool off it is unlikely stocks take a hit.
Wednesday’s surge put the FTSE back above the June trend-line it held for much of November and into a key price zone. How will it handle the resistance zone in the vicinity of 6917/55? There was one spike high above this zone on 11/10, but the bulk of highs and lows created since August are in the before mentioned range. This makes it an important barrier for the FTSE to overcome if it is to pick up momentum alongside other major global markets. As such, resistance is resistance until it isn’t and our level of bullishness will remain tempered until it is overcome. The recaptured June trend-line will be of interest. As long as it stays above on a daily closing basis it could keep a bid in the market for a push through the 6917/55 zone.
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.