FTSE 100 Technical Highlights:
- FTSE is trading off of significant long-term support
- Stay above and higher, but road to recovery likely bumpy
FTSE is trading off of significant long-term support
The freefalling FTSE 100 has thus far found a low and is starting to bounce. Where it is bouncing from is of interest given its long-term nature, with the trend-line at its feet extending higher from the 1980s. There is also a pair of troughs from 2010 and 2011 that are helping keeps price supported as well.
The powerful thrust off the lows suggests we won’t see a meaningful decline below the 4898-low created on March 16. Even if we do see price start to sink below, it quite possibly will be short-lived. Watching how strong momentum is on any break of support will be key.
Looking higher, it is difficult to say how high this rally could carry, but it probably won’t be anything of the rip-roaring variety as there is still plenty for markets to sort out and confidence has taken a big shot. The likely outcome is that it will be choppy trading with an upward bias.
From a trading perspective, given that the outlook is tilted upward and anticipated to be choppy, looking to dips as buying opportunities is likely to be more rewarding than chasing the market higher. One can chop themselves up in this scenario if not careful and still have the direction of the market correct.
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FTSE Monthly Chart (long-term support)
FTSE Daily Chart (anticipated to chop higher)
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—Written by Paul Robinson, Market Analyst
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