FTSE 100 Technical Outlook – Support at Risk, March Retest Could Be In the Works
FTSE Technical Highlights:
• Channel break risk climbing along with March low retest potential
• If bottom of channel can hold, though, slide can stay contained
With coronavirus lockdown fears rising again global stock markets are taking it on the chin. The FTSE 100 had been trending lower while other major markets have generally been stronger since the spring (i.e. S&P, DAX, Nikkei); the relative weakness has kept the FTSE in position to retest the March lows.
The March lows, or approaching them, is certainly a prospect we need to consider at this juncture. But before we can get too aggressive with our outlook the neat channel that has been maturing since the springtime must be broken.
The lower parallel is just around the corner and a break could certainly be in the works in the days ahead. If price lurches below, then it will be a sign that buyers who have been stepping in on each new low since May have all but given up.
A dive towards the March lows would bring back into play a trend-line from the 1980s (when looking at log scale weekly chart). This arrives around 5200, so it is not immediately in view but could quickly come into view if we see global stocks sell off in earnest.
If the lower parallel can continue to hold, though, then we must respect it as support. With that in mind, we cannot get too aggressive just yet with a short bias. Some more work inside the channel may develop before eventually resolving one way or the other.
FTSE Daily Chart (Watch lower parallel of channel)
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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.