FTSE 100 Technical Highlights:
- FTSE 100 declines sharply into a few forms of support
- A bounce is anticipated, but may not last for long
For our analysts intermediate-term fundamental and technical view on the FTSE and other major indices, check out the Q3 Global Equity Markets Forecast.
FTSE 100 declines sharply into a few forms of support
The bull-flag breakout last month lasted a whole day before several days of selling completely buckled the breakout and turned the technical picture on its head. Selling has the FTSE trading at a few angles of support of varying degrees.
There is price support from March to May in confluence with a minor trend-line, but more importantly the 200-day MA runs through the thick of it. The confluence between various forms of support in conjunction with a market that is short-term oversold should lead to a bounce.
But generally speaking, the damage may have already been done, as has been the case across the globe with sell-offs causing significant technical changes to the landscape. The FTSE could reasonably retrace back towards 7400 and still set up bearish.
It’s about the price action. If the bounce is fast but fizzles just as fast or if it is a choppy upward grind, then it will likely prove corrective in nature (especially the latter path). For now, aggressive would-be longs may look for an oversold bounce, while would-be shorts could be best served waiting for an entry later on.
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FTSE Daily Chart (trading at support)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
