FTSE Trying to Gain a Footing at Trend Support on BoE Day
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FTSE Technical Highlights:
- FTSE pulling back to trend support off December low
- How it responds here is important
FTSE pulling back to trend support off December low
Today is the BoE meeting, and on that we may see a material move out of GBP and the FTSE. With the Footsie at an important trend-line it could be meaningful, at least in the near-term. The trend-line off the December low (lower parallel of a channel) was the targeted line of support looked at last week.
Now that the UK index is there it needs to hold, else we could see considerably more weakness as not only support is broken but given its overall laggard status among other major global indices. A breakdown would have the 200-day MA at 7207 in focus as the next possible point of support.
Before talk of support breaking we must respect it for as long as it holds. A solid push today may be enough to continue the multi-month trend higher. Strength will have to get the FTSE hurdling over the trend-line off the record high first before looking to develop a new swing-high above 7529.
From a tactical standpoint, traders may be best served by waiting for a reversal off support on a daily closing basis before entering long. With the old rule of thumb in mind, “don’t short support”, would-be shorts will likely to be best served waiting for a break of the December trend-line before running with a bearish trading bias.
FTSE Daily Chart (watch response at t-line)
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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.