What’s inside:
- FTSE dropping into key support zone of 7130/104
- Support is support until it isn’t, warrants caution for bears
- Key levels outlined
This is what we had to say on Wednesday – “We look for the index to continue to drop, with eyes set on the old record highs – 7104 on a closing basis, 7130 intra-day. It’s not a stretch to look for the market to get to those levels in the next few days or less.”
The morning low, at the time of writing, is 7131.50, so the market is knocking on the door of a significant zone of support. We are giving support a window down to ~7100 before a decline any further would be considered a breach of the old highs. A failure would need to occur on a closing daily basis; an intra-day piercing and recovery back above doesn’t constitute a valid break, and in fact depending on how strongly the market rebounded, it could be considered a bullish rejection.
First thing is first, the market is in the vicinity of key levels, and support is support until it isn’t. For now, from a short-term trading perspective it’s a good spot for shorts to become increasingly cautious while would-be longs may want to wait for a solid push into and hold of support before establishing a long position.
Should the market find downside clearance of 7100, the next level, or line rather, we look for the market to make a move on is the tend-line running up from the June low underneath the November low. Whether you draw the trend-line from ‘low-to-low’ or ‘close-to-close’, they both fall in the same vicinity. Minor horizontal support arrives at 7167/6997, with the latter, depending on the timing, possibly aligning with the June trend-line.
However, before we become focused on down-side levels below the old highs we look for the FTSE to hold on its initial test and bounce at the least, but need to bullish see price action before turning constructive.
FTSE 100: Daily
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---Written by Paul Robinson, Market Analyst
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