FTSE Technical Outlook: The Battle Around 7300 Continues
FTSE Technical Highlights:
- FTSE trades to best levels in weeks, but still in fight with 7300-area
- A solid close above resistance helps clear the way for higher prices
- Stay below, however, and outlook remains neutral to bearish
This morning, the FTSE is poking its head above the 7300-level again, trading to its best levels since February 5. To build on the rally off the monthly low a solid close into the 7300s is needed. Should it do so, the once level of resistance will become a source of support.
It may not be a smooth ride higher should we see the footsie reclaim this level, as much technical damage was done during the decline. There is underside trend-line resistance not far ahead, which could prove problematic, even if only temporary. The next line of resistance comes in at the 200-day MA at 7449.
If another close today takes shape below 7300, then the outlook will continue to be neutral to bearish for at least another day. Looking lower, if sellers show up in earnest, last week’s low at 7187 arrives first as support. But the more important inflection points arrive via the Feb 2016 trend-line, followed by the all-important area surrounding 7100.
From a tactical standpoint, ~7300 is a highly visible line-in-the-sand for both sides of the market. For shorts, stay below and the outlook continues to be somewhat favorable, but close above and it can be expected that shorts will get squeezed, even if only for a short while. Would-be longs will be best served waiting for a close above resistance, but expectations should be minimal in seeing a big pick-up in momentum despite having crossed an important threshold.
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FTSE Daily Chart (Battle at 7300)
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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.