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FTSE 100 Technical Outlook: Heavy, Unable to Get into Gear

FTSE 100 Technical Highlights:

  • FTSE doesn’t look to healthy, at risk of a fall in the fall
  • No confirmation yet, but it wouldn’t take much

FTSE doesn’t look to healthy, at risk of a fall in the fall

The FTSE continues to tread water and the longer it does while other markets remains stable to higher, namely the U.S., the worse it is viewed for the index as we head towards the fall. The relative weakness continues to become increasingly glaring.

If we start to see price decline below the monthly low at 5852 and break the lower parallel of the would-be bull-flag that could still be in the cards, then the FTSE may indeed be in trouble and in for a run towards the March lows.

It is still also possible that the bull-flag scenario does play out, but with global risk appetite firm and the FTSE doing nothing, along with a seasonally weak time of the year quickly nearing, this scenario is running out of time. Nevertheless a break above 6326 could have the top-side in play.

For now though the FTSE may do nothing and continue to move sideways until we get into September. Keep an eye on the U.S. markets as they traverse into record territory. Things certainly look frothy there and we may see some mean reversion between the stock market and reality. In this case, weakness abroad is likely to send the FTSE over the edge.

At the immediate moment, not pressing bets in either direction looks like a prudent way to handle the choppy trading conditions we are presented with. Better risk/reward will at some point present itself.

FTSE Daily Chart (choppy, relatively weak)

FTSE daily chart

UK 100 Index Charts by Tradingview

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—Written by Paul Robinson, Market Analyst

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