FTSE 100 Price Outlook: Showing Some Signs of Life, but Can it Last?

FTSE 100 Technical Highlights:

• FTSE bouncing but that appears to be all it is
• Broader topping formation potential

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 bouncing but that appears to be all it is

The FTSE is lifting a bit, but the rally isn’t bringing it up as fast as other global markets, and as such keeps the pressure on it. It wouldn’t take much to knock it back down to cycle lows since the July 30 high. Brexit/GBP strength continue to be headwinds.

Even if the UK index climbs higher from here a head-and-shoulders top could come into play in the weeks ahead as the left shoulder and head are clearly defined. A rise and stop still needs to develop to post the right shoulder, and of course to be validated the price needs to eventually drop below the neckline, but the scenario is building momentum.

For now, the current technical landscape leaves one in a state of wanting. With risk skewed towards ‘just a bounce’ longs aren’t left with great risk/reward, at least fresh longs at current levels. Shorts haven’t yet a good level or bearish price action to work with. ‘Wait and see’ looks like a good approach on my end.

Continue to monitor how the FTSE trades relative to other major global markets, namely the S&P 500 and DAX. Relative weakness coupled with a bearish-looking price sequence could line things up nicely for would-be shorts.

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FTSE Daily Chart (bouncing, H&S potential)

UK 100 Index Charts by Tradingview

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---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX