FTSE 100 Technical Analysis: Watching the Turn Lower from Resistance
FTSE 100 Technical Highlights:
- The FTSE is currently setting up to fail upon a break of price level and 200-day MA
- This could set up for a broader range to develop from current levels down to 7k
Recently, the FTSE has been struggling around the 200-day moving average and June 28 high at 7362. This morning price punched through, but was quickly swatted lower – this type of punch and reverse price action through resistance suggests we may see some downside follow-through in the days ahead.
General global risk appetite for stocks is somewhat bullish, so we might not see the FTSE fall apart here, but we could see a range start to develop from around current levels down to the 7k mark. A pullback towards 7200, a recent swing-low, appears to be a reasonable target.
If stocks start to really get some traction on the downside then indeed we may see a testing of the bottom of the range around 7k. At some point this level looks likely to break as a broader bear market continues to grip global stock markets, but it is unclear from what levels a decline may begin.
It could be that the FTSE starts putting in an important ceiling now, or a temporary one off a technical failure to hold above resistance.
Should we see today’s reversal fail to hold in place, then look for the day high at 7396 as an invalidation point for a bearish trading bias. A break above that level will clearly have the 200-day MA and June 28 high broken. At that juncture, the bias would be higher and have current resistance potentially turning into a new source of support.
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.