FTSE 100: Standoff at Record Highs
- The FTSE 100 continues record closes in record fashion
- Top-side trend-lines threaten the advance, but...
- Need to be patient and wait for price to indicate a decline could be underway
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The FTSE 100 continues to make records in more than one way. The index has been notching out not only new record closing prices, but also doing so with the most consecutive record closes (11) since its inception in 1984. Consecutive closes in one direction or another isn’t, in of itself, an overbought/oversold indicator, but it certainly makes a market increasingly ripe for a reversal. And there is reason right in front of us to think the run is due for a set-back in the very near future.
The FTSE is trading at a confluence of top-side trend-lines. The first is the line crossing over the October 2015 and ‘16 highs. The second top-side trend-line goes back further to the peak in 2013 and crosses over the record highs in 2015. The two lines are separated by about 30 or 40 points, close enough to consider as confluence. If the market is able to extend beyond this intersection, there is another line extending higher from the August peak over the October high. The thinking on this end, is that the market won’t make that far on this push.
Fighting persistent uptrends from the short-side is a losing endeavor, so we will wait for price action to tell us when a break in the trend is taking shape. As we discussed the other day, a closing bar below the prior day low would be one signpost of a turn in momentum. This could be implemented as a trailing stop, as well, if you’ve been holding a long position.
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.