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FTSE Technical Outlook – Oversold, Key-reversal to Lead to Bounce

FTSE Technical Outlook – Oversold, Key-reversal to Lead to Bounce

What's on this page

FTSE Technical Highlights:

  • FTSE in oversold territory, bounce due
  • Semi-bullish key-reversal yesterday
  • Looking for only a recovery at this time

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FTSE in oversold territory, bounce due

The FTSE has been beat up pretty good in recent weeks, but for now its woes are poised to be put on pause as oversold conditions and bullish price action suggests a bounce, at the least, should develop. At this time a reprieve may be all we see, but for those who have been hitting the down-move with shorts, now may be the time to take a step back, or at least consider using some type of trailing stop to protect profits.

Yesterday’s reversal bar wasn’t uber-convincing, but enough to tap the brakes on what has been a drive down a one-way street. Should a decline below yesterday’s low negate the reversal bar, we’ll look to the Feb ’16 trend-line as another point of interest. Given how sharp multi-week decline, a bounce back towards 7400 looks reasonable to expect. The lower parallel tied to the trend-line off May high lies around 7375, but its exact location depends on when price meets it, should it.

FTSE Daily Chart (Oversold, key-reversal)

FTSE daily chart, oversold, key reversal

Longer-term, the bearish Reverse Symmetrical Triangle (RST) is in full force right now and has the footsie looking geared up for a run on the bottom of the pattern in the 6800s. We’ll monitor how any bounce from here unfolds and then switch gears towards the bearish camp should price action warrant such a maneuver.

Check out this guide for 4 ideas on how to Build Confidence in Trading.

FTSE Weekly Chart (Overall, still looking for base of pattern)

FTSE weekly chart, overall, still looking for base of pattern

Check out this earlier piece by my colleague, Martin Essex, concerning the impact of Brexit and the FTSE.

You can join me every Tuesday at 9 GMT for live analysis on equity indices and commodities, and for the remaining roster of live events, check out the webinar calendar.

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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.