FTSE Highlights:

  • FTSE not showing signs of life after decline from record high (bearish)
  • The price sequence looks ready to soon resolve to the downside
  • Relative weakness on display compared to the U.S. (S&P 500)

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FTSE not showing signs of life after decline from record high (bearish)

The FTSE’s technical posturing isn’t looking very healthy these days after putting in a modest initial recovery during February. The first bounce took the index back to the all-important 7300-line, where significant resistance was found (a level dating back to last year) and turned the market lower.

Most recently, the bounce off the monthly low was only able to drive the footsie back up into the mid-7200s before seeing the 100 roll over again on Monday. The lower-low arriving just beneath the 2016 trend-line and support surrounding 7100 extending back to late-2016, along with the lower-high this week, has the market is putting in a bearish price sequence resembling a developing descending wedge.

Further selling may be just on the horizon, with potential of becoming significant. Looking lower, a convincing drop below the month-low at 7062 will put the footsie at risk of a decline down to a slope rising up from August 2016, in the vicinity of 6900. The next level of targeted price support, however, doesn’t arrive down until beneath 6700.

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FTSE Daily Chart (carving out bearish price sequence)

ftse daily price chart with bearish price sequence

Relative weakness on display compared to the U.S. (S&P 500)

Keep an eye on U.S. markets, as they are still maintaining a stance which could go either way at this point, and given they are the leading global stock market, any sizable move there will be felt elsewhere. Europe and Asia have been weakening at the first hint of the S&P 500 turning down but aren’t finding the same magnitude of strength on rallies.

Bottom line: There is relative weakness outside of the U.S. So, even if the U.S. softens up just a bit, that might be all it takes for the FTSE and other major global players to trade lower. An out outright risk-off environment with strong U.S. participation is likely to see global markets take a hard hit. If the U.S. (S&P 500) can push towards a new record, then look for world stocks to at least hold a bid and attempt to join in on a moderate rally.

If you’d like to listen in on live analysis pertaining to global equity indices (and commodities), you can join me every Tuesday at 10 GMT time for my technical insights.

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---Written by Paul Robinson, Market Analyst

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