FTSE Technical Analysis – Breakout of H2 2017 Range Points to 7850-7900
- FTSE well above 7550/600 breakout zone, viewed as strong support should it test
- Size of range during the second half of 2017 implies potential for a move to 7850/900
- Longs favored on shallow dips/consolidations, a break below support changes this view
In our final post of 2017, we noted that the FTSE has big support in place following the breakout above the 7550/600-area. Tuesday started things off on a bit of a rough note, but so far, the footsie hasn’t really come near testing old resistance as new support.
The size of the range which dominated the second half of 2017 is roughly 300 points in size, which suggests from the point of breakout we could see the market rally by that much. This would put the FTSE up in the 7850/900-area. It would indeed be an impressive rally still yet to come, but certainly within reason.
As long as the 7550/600-area holds, then so does a bullish bias. A breakdown below would suggest a fake-out breakout and that a larger decline is underway. From a tactical standpoint, the path of least resistance at this time favors longs, but waiting for shallow pullbacks and consolidation patterns may be the most prudent way to approach the market.
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---Written by Paul Robinson, Market Analyst
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