Can 'trapped' FTSE 100 break out of this range?

by Alistair Strang from Trends and Targets |

FTSE has done little since late December. Our chartist guesses why and shares his latest forecasts. 


Since 27th December, the FTSE 100 has experienced a 100-point range. This feeling of a "trapped market" hopefully has a chance to ease on Friday 17th January with the third Friday intra-day auction at 10:15am.

This exercise is designed to correct the value of the FTSE 100 index, clearing up any drift. Sometimes, it can also clear the log jam of a stalled market place.

We can hope! The fly in the ointment comes volumes traded through London being pretty low, thanks to the usual holiday malaise, and this lack of trading tends to ensure the FTSE index value doesn't drift too far from reality with little correction required.

When this is considered, in conjunction with the lack of any real direction on the London index, we're slightly lacking in confidence giving numbers today.
The market should be going up but isn't. Equally, when reversals are triggered, the market is failing to drop.
The immediate situation for the FTSE calculates as follows. Movement now exceeding 7,651 is supposed to generate a loft to an initial 7,678 points, far from impressive. If exceeded, our secondary calculates at 7,729 points.

Alternately, if the FTSE now finds an excuse to stumble below 7,587 points, it's supposed to experience some reversal to an initial 7,567 points with secondary, if broken, down at 7,539 points. This sort of nonsense keeps the UK market safely constrained within the straightjacket of a trapped market.

It's almost like the FTSE is awaiting for something important to happen before showing its hand. As mentioned earlier, the underlying forces are of an upward expectation, the market needing below 7,225 points to force us to question our optimism for the future.

Unless something punctures the 7,225 level, there's a growing series of calculations suggesting the UK could even aspire to a high of 8,300 points sometime this year.

Near term, we're far from confident with our expectations, suspecting Friday shall bring some reversals. This will even tie in with the index refusing to better blue on the chart, the downtrend since 2018.

Have a good weekend.

Source: Trends and Targets      Past performance is not a guide to future performance

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang, Shareprice, or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

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