FTSE 100 Found Its Footing at Support, but Will It Last?
- FTSE 100 bouncing from support around 7300
- Currently trading above the broken 2016 trend-line, important to close above
- For a bearish outlook to resume a clean break of 7300 is needed
Find out in our Q3 Forecast what’s driving the FTSE 100 & Sterling this quarter.
The last time we discussed the FTSE 100 it was in a precarious position, one which we talked about in the weekly forecast. The UK index went from nearly closing to a new record high to testing the neckline of a possible ‘double-top’ formation in a week’s time. There was no shortage of volatility.
The operative word in the prior sentence being “testing”, because while it appeared as though the footsie was going to breakdown soon (it had already broken the Feb 2016 trend-line) it closed last week at neckline support. Support is support until it isn’t.
Speaking of the Feb 2016 trend-line, today we are seeing the market climb back above, whether it can stay there until the close is a question we’ll have the answer to in a few hours. A close back above would be viewed as an important recapture of broken support. A close below would put in a daily reversal bar and constitute a failed retest.
In the event of sustaining above, then the bias is neutral to bullish. Possibly the footsie is working on carving out a trading range of ~7300-7550 in this case. If we see a failure to hold onto this bounce, then focus will shift back towards the neckline of the double-top. In this case, 7300 becomes the critical level of support to watch, and on a break focus shifts towards lower prices with not only the double-top triggered but it would also constitute the first lower low since 2016.
FTSE 100: Daily
See the Webinar Calendar for a full line-up of upcoming live events with DailyFX analysts.
---Written by Paul Robinson, Market Analyst
You can receive Paul’s analysis directly via email by signing up here.
You can follow Paul on Twitter at @PaulRobinonFX.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.