FTSE Chart Analysis – Pressure on for Now, Watch for Higher Low
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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
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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.
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FTSE Daily Chart (Watch how pullback plays out)
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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.