FTSE Technical Highlights:
- FTSE carving out a month+ ascending wedge
- Watch the quality of the breakout
- Top and bottom-side levels to watch
For the broader fundamental and technical outlook on the FTSE & British Pound, check out the DailyFX Q3 Trading Forecasts.
FTSE carving out a month+ ascending wedge
The FTSE has been a choppy mess of late, with directional cues lacking – that could soon change. The past month+ price action is leading the index towards a breakout from an ascending wedge. Price is close enough to the apex that a break could come at any time.
Up, down, or fizzle out? An ascending wedge within the context of an uptrend is a strong signal for higher prices, but this one is within the confines of a downtrend off the record highs (albeit a weak trend). A break lower could mark a 3rd lower high since May. A breakdown below the lower trend-line of the pattern will have 7508 in focus, followed by the 200-day currently at 7474. Below there, support levels are lacking.
A solid breakout into the 7700s will have the wedge running higher and the footsie on the verge of snapping the lower-high, lower-low sequence. To do this a crossing of 7793 will need to develop, but if it does then an attempt at record highs could be right around the corner.
The last outcome, is for the pattern to turn into a couple of false breaks and more continued choppy price action. Given it is summer we can’t rule it out. This is why we’ll be watching the quality of the breakout. A strong push and close outside of the pattern will give more conviction, while a limp out of the gate will bring hesitation.
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FTSE Daily Chart (Ascending wedge nearing breakout)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
