FTSE Technical Highlights:
- FTSE trading towards trend-line resistance, pullback due soon
- Big decline not expected, retracement for now
- Continue to watch the U.S. markets for cues
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FTSE trading towards trend-line resistance, pullback due soon
The rebound in global markets has been relatively fierce, with the FTSE having already taken out a couple of resistance thresholds so far. It is currently working on overcoming lows created during October and November, but if a reversal develops today from this morning’s strength then we may have a rejection in place.
A rejection would also be coming on an attempt to trade above one angle of trend resistance running down off the September peak. But if today’s push higher can hold and even further itself along, the next line of resistance runs down off a high created back in August.
The levels are there, now we must watch price action. So far, the drive higher off the December low has been relatively unimpeded, and until we see sellers show up then we must respect momentum. One of these levels is likely to put a wrinkle in the rally soon.
A sudden turn down in momentum will be the signal that a pullback is likely underway. Currently, I am not looking for the market to fall apart. The outlook for later this quarter and the rest of the year remains firmly bearish, but these cycles take time. Trading appears likely to be a two-way street and with the FTSE often undergoing choppy phases this is seen as being especially true for the UK index.
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FTSE Daily Chart (Resistance in the area)
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—Written by Paul Robinson, Market Analyst
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