FTSE 100 Technical Outlook Murky at the Moment
- The FTSE 100 chops around with little direction
- Potentially bullish formation visible on intra-day time-frame
- Sidelined until the picture becomes clearer
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The question we posed on Monday was, “bounce or beginning of a sustained advance?” We’re still in limbo on getting a concrete answer as the FTSE 100 fails to gain much momentum in in the past couple of sessions.
From the other day: “Market conditions are expected to be more on the side of choppiness for now...” Indeed, this looks like this will be the case as the market struggles with direction; it appears as though the upside has sellers waiting (evidenced by yesterday’s reversal day on sterling doing the same in reverse), while the downside has buyers with a broadly strong trend still in place and support levels not far below.
From a trading perspective, the footsie isn’t leaving us with much yet to sink our teeth into. Potentially, a bullish inverse head-and-shoulders formation is developing (visible on intra-day time-frames), but we’ll need to see the right shoulder form and the neckline break before we can call it a valid formation.
Should the pattern fail to develop, a push lower into support surrounding 7100 will at least help give us a better idea of how the market wants to proceed from there. Another rejection at support may help clarify that the market wants to head higher, while a failure by buyers to step up could give us the evidence needed for acting from the short-side.
For now, we’ll wait patiently while the market sorts out what it wants to do and presents us with a good looking risk/reward opportunity...
FTSE 100: Daily/2-hr
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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.