FTSE 100 Dropping into Trend Support, but Will It Hold?
- FTSE 100 intermediate-term breaks channel with broad risk aversion
- Testing trend support extending up from the June lows
- Other key support resistance levels outlined
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When we last discussed the posturing of the FTSE 100 on Thursday, we had this to say about the index and markets in general: “a period of risk aversion looks to be upon us. And while the FTSE doesn’t present the clearest picture, the bias in general for global equities is one of caution to bearishness.” This morning, at the time of this writing, the footsie is getting cracked by 1% as risk aversion sweeps across markets; overnight the Nikkei took a 1.44% hit, the DAX is down about 90 bps or so, and the S&P 500 futures in the U.S. are down by close to 1%.
Today’s selling has the FTSE well below the lower parallel of the channel off the 2/2 swing low. In fact, it’s testing an important trend-line(s) off the June/’Brexit’ lows. We’ve drawn them in a couple of ways in light of the ‘tail-day’ event on the day of the vote. Whether you draw the line connecting closing prints or from low-to-low, the two arrive in the same vicinity. A break much lower from current prices will put the market below both, in addition to carving out a lower low from the 3/9 swing low. A break below the trend-line and the creation of a lower low certainly undermines what has been a fairly firm intermediate-term trend higher.
Looking below the June trend-lines & 3/9 low, the 2/24 low at 7192 and then the 2/2 low at 7093 will be targeted. But only if the footsie can close below support in the area; support is support until it isn’t. It will take some work for the picture to turn bullish.
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.