FTSE 100 Technical Outlook – Clear Line of Support Looks Vulnerable
FTSE Technical Highlights:
- Extended channel continues to hold the FTSE together
- Support in the 5770s tagged for a 3rd time last week
- Looking a new low coming soon, possible channel breakdown
For the past few months the developing channel has been all the talk in technical land, and today it continues to be the broader technical theme in focus on this end. But eventually, maybe soon, the channel will break. However, before that happens a firm floor of support looks vulnerable to give-way to a new lower low.
Last week the FTSE bounced off a pair of lows created during September, making the 5786/771 area an important zone of support. With the general trend angled lower and a wedge pattern coming into view with the help of lower highs it appears solid support is soon to give-way.
A break below 5771 should do the trick to getting yet another new lower low in the eroding trend since early June. This will likely put pressure again on the bottom side of the channel down in the lower 5600s (exact price depends on the timing of when (if) the lower parallel gets hit.)
Eventually the channel structure will give-way. Thus far it has held as support each time it has been met, perhaps this will be the case once again. A break, though, is seen as accelerating the trend and making a run at the March lows likely. Whether it a retest of the low or worse coming, we’ll worry about that as events unfold. For now, the focus for near-term traders should be on six week support.
FTSE Daily Chart (5770s support, lower side 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.