FTSE Technical Perspective – New Record Highs Won’t Come Easily
- FTSE rally stalling at formidable resistance between 7550/600
- A pause then a push through, or reversal?
- Shorts have a backstop to lean on, while ‘would-be’ longs need to be patient
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The FTSE has been showing impressive strength off support just below 7300, but is finding difficulty breaking on through to new record highs. The ~7550/600 area has been formidable since its first run-in back in early June, and it may take some regathering of steam if it is to break into new record territory.
Given the sharp rise the past couple of weeks it’s not surprising to see the footsie struggle on its first attempt. Ideally, if it is to break on through, a small period of consolidation develops to alleviate short-term overbought conditions. ‘High-level’ consolidations (those which form after extended runs) just beneath a major barrier show the market’s willingness to support it.
To the contrary, though, if momentum starts to build on the downside another sell-off may be in the works similar to what we’ve seen the in the past. Although on a couple of those instances it wasn’t clear until after a few pushes higher that the market was ready to turn lower.
In any event, at the moment as long as resistance holds in place, shorts have a backstop to lean on. Given the number of repeated failures in the area of 7550/600, it may server better for ‘would-be’ longs to wait on a confirmed breakout into fresh territory before becoming ‘bulled up’.
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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.