FTSE Chart Analysis – Ricocheting Off Resistance
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FTSE Technical Highlights:
- FTSE technical picture is relatively clean for the moment
- Turning lower off resistance back towards recent support
- Pressure is on the market, but may not see extensive follow-through until January
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FTSE technical picture is relatively clean for the moment
The technical picture in the FTSE is relatively clean at the moment despite all the uncertainty surrounding ‘Brexit’ and the Pound. Even excluding the noise the FTSE has a clean technical backdrop for an index which often is lacking one.
The recent bounce is coming from a series of swing lows created between September and December of 2016, however; the bounce found a ceiling yesterday at former support turned resistance (Mar/Oct lows). So far recent events are playing out in a textbook manner.
Big-picture forces are highly unfavorable for the FTSE, ‘Brexit’ aside. The 100 is a multi-national index and with global stock markets sagging and looking likely to get worse, currency impact is taking a backseat and likely to continue to do so. The three-month correlation between the FTSE and GBP is a strongly positive 63%, derailing from its usual negative relationship since the ‘Brexit’ vote.
Getting back to the near-term outlook, the turn down from resistance could soon have support back in focus, and while there is pressure on the market, broadly speaking, we may see a bit of choppiness between levels as the year quickly comes to an end. Tactically speaking, the best approach may be to trade off levels as long as they hold on a daily closing basis (Support: 6673, Resistance: 6908).
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FTSE Daily Chart (Trading between support and resistance)
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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.