FTSE 100 Outlook – Looking to Break the 200-day, Pattern Neckline
FTSE 100 Technical Highlights:
- FTSE 100 trading at 200-day, neckline of H&S pattern
- Support until broken, but looks quite vulnerable
- Levels to watch should the index break
FTSE 100 trading at 200-day, neckline of H&S pattern
A couple of weeks back we looked at a bearish scenario for the FTSE 100 should it turn lower from resistance – a head-and-shoulders (H&S) pattern. With the recent round of weakness since that time the index is back testing confluent support by way of the 200-day and neckline of the H&S formation.
A daily close below 7146 will have the FTSE 100 triggering the H&S and rolling downhill towards lower levels. The height of the pattern from the head down to the neckline calls for about a 380-point measured move, or a drop to ~6770.
Along this path there are support zones to watch; late-March, early-Feb brought support in the vicinity of 7088/41, below there watch 7001/6968 from January, followed by the measured move of 6770. The measured move target (MMT) is just an approximation without any actual levels backing it, leaving a break below the January swing level open for potential to take the FTSE to a swing low from Jan at 6734.
Tactically speaking, today could be an important day as confluent support and a bearish price pattern could trigger by day’s end. If this is the case, then shorts should gain the upper hand in the sessions ahead. If support holds it will be a prudent move to lay low on shorts, while the chart will still look in need of mending before longs become appealing.
FTSE 100 Daily Chart (at 200-day, neckline)
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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.