FTSE 100 Well Supported, Eyes for Record Highs
- Risk events, FOMC and BoE are over, a return to ‘normal’
- FTSE 100 well supported by confluence of support
- Global risk trends supportive, looking for a push to and possibly above prior record highs
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Two major events on the docket this week – the FOMC and BoE meetings – have come and gone. Markets can return to ‘normal’. The FTSE 100 is hanging tough above the June trend-line, and as of the close yesterday, it sits firmly above the once resistance now turned support zone extending back to August. As we expressed the other day, the confluence of rising slope and horizontal support makes for a sound back-drop to lean on.
A healthy appetite for risk is shaping up to keep stock markets around the globe propped up into year-end. The Nikkei has been ripping with a vengeance, U.S. markets are trading in record territory, and in Europe, major indices in the DAX and CAC 40 recently made strong momentous breakouts. Generally speaking, while markets look quite healthy they are extended a bit here. However, it seems unlikely they will fall from the sky given where we are in proximity to the new year and likely to finish out on a positive note.
The FTSE is within striking distance of reaching record highs at 7104 on a closing basis, 7130 intra-day. As long as previously mentioned support holds, we look for the FTSE to at least test record levels in the not-too-distant future. Whether it has the sauce to breakout, that’s another story. But it seems that could be the case at this time. To turn the picture negative we would need to see a drop back below confluence of support and trade below the 12/12 low at 6875.
FTSE 100: Daily
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Taking a short-term view, the 2-hour chart shows us good near-term trend-line support and a series of higher highs and higher lows. There is a little resistance around the 11/10 reversal day high, but shouldn't be a signficant obstacle to overcome in this tape. The first level of support comes in around the 12/12, 12/13 highs at 6977. This roughly coincides with the trend-line off the 12/2 low. Even on a breach of the trend-line as long as yesterday’s low at 6925 isn’t taken out, then the trend structure remains favorable. A decline below 6925 will quickly bring the June trend-line into focus on the daily time-frame. Bottom line, the market is well supported at this time and until these levels are broken with conviction the path of least resistance remains in favor of longs.
Created with Tradingview
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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.