FTSE 100 Fortifies Important Support, but Has Big Test Ahead
- FTSE 100 attempts to break major support following BoE, but holds
- Short-term trend-line in way, but more formidable resistance lies not far ahead
- Key bottom and top-side lines keep market in range-bound environment
On Thursday, when we looked at the FTSE 100 prior to the outcome of the BoE meeting it was pressing down near the major support zone we’ve been discussing surrounding 7400. With a couple more voting members turning in favor of a rate hike, a less-dovish vote of 5-3 vote in favor of staying pat on 0.25% sparked a rally in sterling and helped push the footsie below the 2013 top-side trend-line and peaks dating back to early March. The FTSE found some sponsorship, though, on an attempt to break significant support, and managed to close the session above this key area. Which is what really mattered – the close. We’ve seen a very nice rebound in the past day-and-a-half since. Once viewed as major resistance (2013-top-side t-line & turn points associated with it), it's now proving its worth as a major source of support. As long as the market can stay above the Thursday low at 7378, at the least the market will hold a neutral stance for the foreseeable future.
Trouble lies not far ahead, though. First off, a minor trend-line running off the record high is currently in the way. But the more important area of resistance comes in on an advance towards record highs. The January to March top-side trend-line we’ve discussed at length here, will once again likely prove to be a challenge to overcome. A close above this important line of resistance and the 6/2 record high at 7599 will be required to clear an obstructed path in record territory. At this time, confidence is low we will see strong momentum develop in either direction; range-bound market conditions seems the most likley scenario until the market can sorts itself out.
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.