FTSE Technical Analysis: Extending Towards Multi-year Resistance
FTSE 100 Technical Highlights:
The FTSE 100 is continuing its strength following a breakout above a barrier of resistance via the trend-line running off the 2018 high. The upward trajectory appears set to continue in the near-term, but big resistance lies not far ahead.
The pre-pandemic highs created in January 2020 at 7689 along with the 2019 high at 7711 makes for a tight zone of resistance that may be difficult to overcome on the first approach. Price action will be key to watch.
A reaction, i.e. a swift reversal day, could be the first indication that a correction will begin. Given the way the FTSE often times trades – three steps forward, two back – it wouldn’t be surprising to see a pullback of a few hundred points before trying to push onward again.
Whether the initial set of resistance levels can be broke on a first test or not, beyond there lies the 2018 record high at 7903. This makes the zone from right around 7700 up to just over 7900 a very important one to pay attention to in the days/weeks ahead.
For now, continuing to run with a bullish bias but that appears likely to be soon put to the test. A corrective move, whether it comes in the form of a pullback or consolidation, could do the FTSE some good for extending into fresh record territory. The preferred strategy is to buy on dips over chasing momentum.
FTSE Daily Chart
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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.