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FTSE Technical Highlights:

  • FTSE reversal last week at resistance keeps pressure on
  • If selling doesn’t accelerate higher-low may soon form
  • ‘Brexit’ headlines an obvious risk for traders to manage

Looking for forecasts, long-term trade ideas, and educational content? We got you covered. Check out the DailyFX Trading Guides page for details.

FTSE reversal last week at resistance keeps pressure on

Last week, when I last discussed at the FTSE the view was that the rally was at risk of reversing. Indeed, the price action on 1/11 was the type which tends to suggest an exhaustion has occurred, marked by a clear key-reversal candlestick.

The pullback thus far hasn’t been all that aggressive, but pressure may continue on the UK index in the near-term before finding a low. More gradual declining would suggest that weakness may turn out to be a buying opportunity. A higher low forming relatively soon would bring the possibility of an inverse head-and-shoulders.

Of course, for this to become an actual matured pattern we not only need to see a higher-low to form the right shoulder but also a push higher through resistance (neckline) and the trend-line running lower since August.

For now, the very short-term trend is towards more selling, but should we see a sudden stop and reverse it may be time to flip the script back towards bullish bets. The tricky part about trading anything UK-related is the obvious headline risks, so it will be extra important to know your risk and take protective measures in the event of news hitting the tape.

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

FTSE Daily Chart (Watch how pullback plays out)

FTSE daily chart, watch how pullback plays out

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