FTSE 100 Tech Update: Big Line of Former Resistance to Turn Support on a Dip
- FTSE 100 slashes through significant trend-line resistance, trades to new record highs
- Old resistance to turn new support
- Looking higher, January/March top-side trend-line may act as next stopping point
See what's driving sterling and the FTSE 100. See our market forecasts for details.
On Friday, when we last took a look at the FTSE 100 we were focused on the 2013 trend-line which the index was trading up against, but now well above as the footsie moves further into record territory. Given the trend-line’s influence since January it was viewed as a more significant point of resistance than the March record high. Now that it’s been overcome, as per usual – old resistance becomes viewed as new support.
The FTSE is extended in the short-term, having risen in a fairly relentless fashion since the end of last month. With that said, though, there is no interest on this end in making a wager against the market; picking tops is a business we’ll leave to others. On a short-term correction we will look to a couple of sources of support as potential opportunities for ‘would-be’ longs to join the trend higher. First, the old high at 7447 may keep the market buoyed, but the potential source of support which has our most attention is the 2013 top-side trend-line. Given how well it kept a lid on the market on several occasions since January, it appears likely it will put a floor in on any weakness we may see in the coming days. It’s possible the trend-line rising up from the April low also collides with the ’13 t-line, further fortifying support for the market. In the event the market reverses hard through noted support we would need to reassess.
Looking higher, there is a top-side trend-line crossing over peaks in January and March which we will keep an eye on as resistance. It’s only viewed as a minor inflection point at this time given it is running higher with the market, but should the footsie continue to extend into this line from here without taking a rest it will increase the likelihood of seeing a pullback or consolidation develop at that juncture.
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.