FTSE – Weak Technical Posturing to Lead to Lower Levels
- FTSE bearish-looking wedge continues to develop
- Sub-6700 targeted, ~6950 could provide initial support
- UK index set to continue leading global weakness
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FTSE bearish-looking wedge continues to develop
The FTSE remains a soft spot in global equities, with this week it putting in yet another lower-low over the past several weeks. Monday’s sell-off was halted at the bottom of a developing wedge, which given the proximity of the apex doesn’t have much time left before we should see a one-way move develop.
Wedges by nature, once mature, can break out in either direction, but given the slight downward tilt of the pattern following the swoon off record highs, it’s more likely than not to break to the downside. Furthering along the bearish case, is a ‘lack of respect’ being shown to the important 7100-threshold and February 2016 trend-line, along with the generally weak nature of the FTSE relative to other major global markets.
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FTSE Daily Chart (Bearish-looking wedge ready to break)
A downside break will have a weak slope from August 2016 in focus as first up in terms of support, roughly 6950. The area of significant interest, though, doesn’t arrive until beneath 6700 where several lows were created from August to December 2016.
If a bearish break is to unfold, then we shouldn’t see trade above the top-side trend-line of the pattern. Should this happen, then we’ll have to consider a bullish alternative, but until the market can recapture 7300 the FTSE will still have much work cut out for it to turn prospects decidedly positive.
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---Written by Paul Robinson, Market Analyst
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