FTSE Technical Analysis: Whipsaw Price Action Leaves Outlook in Limbo
FTSE Technical Highlights:
- FTSE whipsawprice action casts shadow on a clear outlook
- Could be posting a lower-high, or finding its footing – difficult to tell at the moment
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FTSE whipsaw price action casts shadow on a clear outlook
Lately, price action in the FTSE has consisted of erratic swings, making it difficult to get a solid handle on the market. In last week’s commentary, we noted that it looked as though the FTSE wanted to post a lower-high and trade down as its next move. That could still be the case, but so could trade back to the top-side and a run at the record high set in May.
What is a trader to do in this situation? After yesterday’s strong swing higher following weakness early in the session (corresponding with big downside movement in GBP, same with EUR down and DAX up), there could become some positive top-side momentum.
But if we see another failure here on a push higher, then looking for a run back down to the bottom of the range near 7600 is a reasonable expectation. Taking advantage of this involves a range-trader’s mentality; that is, to look for trades at the perimeter of the range and peeling off trades as price moves back to the other side of the range.
Risk/reward overall is lacking at this juncture for this market participant, taking to the sidelines looks like a prudent move for those who don’t find range-trading to fit within their methodology. In time the picture will clear up, but it will take some patience before getting a good look. Barring a major driver, a summer trading environment could begin to dampen the quality of trading, but this doesn’t mean one can drop their guard as things can change quickly.
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FTSE Daily Chart (Choppy range for now)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.