FTSE Technical Highlights:
- FTSE picks up momentum after slow start off low
- Trading around prior lows from summer
- Break above resistance opens up room
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FTSE picks up momentum after slow start off low
When the FTSE posted a key-reversal back on September 11 we made note that given the oversold state it was in and bullish price action it was due for a recovery bounce. In recent sessions recovery-mode morphed into a strong surge higher.
Yesterday, price slightly overtook the 200-day, but still needs to firmly overcome lows from June and August. A close above 7520 may help clear a path towards a swing high created late last month in the 7630-vicinity, or better by running to the trend-line off the record high.
Overall, since topping back in May we still hold a skeptical eye towards a rally, though, as the trend since May remains negative. However, with appetite for stocks, globally, having improved recently and the U.S. continuing to hold onto a bullish outlook, the FTSE may find itself with sponsorship.
Tactically speaking, it’s a tough spot to be an aggressive buyer after a strong bounce and resistance close at hand. If holding long from lower levels, then traders may want to give the footsie a little wiggle room to see if upward momentum can’t keep the market on the move.
If a sharp turnabout unfolds, that is, if a key-reversal or another negative technical event such a bearish engulfing candle forms, then look backing off from the long-side will be warranted given the overall trend. Shorts may look to reassert if this is the case for what may be yet another lower high in an ongoing sequence of lower lows and lower highs amid a broader topping pattern. Overall, we find ourselves leaning towards doing nothing at this time until better clarity.
FTSE Daily Chart (Trading around prior lows)
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—Written by Paul Robinson, Market Analyst
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