FTSE Technical Outlook – Consolidation Period Would Do Some Good
- FTSE pullback from short-term pattern may be finished
- Holding last week’s low and consolidating looks like best scenario for longs
- If last week’s low fails a run towards the H2 2017 breakout levels may unfold
Last week, we noted a short-term bearish rising wedge which took the FTSE down a bit, but so far it has only amounted to a pullback and not much more. And perhaps that is all it will be. Since breaking out of the H2 2017 range, a bullish bias has been warranted, and as long as we don’t see a sharp slide back inside a broadly bullish bias reamins intact.
Looking to immediate support, the Thursday low at 7683 needs to hold to keep from seeing another leg develop lower develop. Should the market undercut that level, the risk of a lower high (possibly formed yesterday) leading to a test of the range-breakout will increase significantly.
A period of consolidation at current levels would be the best scenario for a continuation higher, with last week’s low holding. In this scenario, the market has some time to further work off overbought conditions created during the run starting back in early December.
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Chart – FTSE: 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.