Doing this could save FTSE 100 from disaster
The threat of a slump for the blue-chip index remains until this happens, argues our technical analyst.
15th February 2019 08:54
The threat of a slump for the blue-chip index remains until this happens, argues our technical analyst.
FTSE for Friday
The UK market celebrated Valentine's Day by trading higher than at any point since last November. Better still, the market also closed higher, suggesting some real strength exists for future market recovery.
As a result, we need to adopt a pedantic stance before playing with party poppers.
The 'blue' downtrend on the chart below is presently at 7,514.112 points. Only in the event the FTSE 100 index trades above this dare we finally, completely, abandon the calculation which presently demands the market is on track for reversal to 5,840 points.
In fact, to get completely jobsworth, the trend is diminishing at 1.45294879 points a day (roughly). On the day of Brexit this blue downtrend will be at 7,451.68 points.
This nonsense actually does have a point. The immediate situation for the FTSE is of movement above 7,233 pointing at coming growth to an initial 7249 points. If bettered, our secondary calculates at 7,307 points, a level where we suspect some hesitation shall be in evidence. The tightest stop position appears to be 7,176 points!
As the chart shows, the market will be nowhere near the ruling downtrend.
To break with tradition, we can give a third ambition should 7,307 be exceeded. It allows future recovery to a further 7,404 points.
And still, the ruling downtrend remains safe and the logic for 5,840 will remain valid, if on very dodgy ground. But, importantly for UK politicians, if they intend to stuff the country, they are still able to do so.
Unless the index betters that blue line, there remain plenty of opportunities for our wonderfully talented leadership (and contenders) to flush things down the toilet.
If we choose to abandon cynicism, the strength of moves thus far in 2019 actually suggest the UK index is on a cycle to 7,743 points eventually. We do not take this calculation terribly seriously at present.
What happens near term if the market fades below 7,176 points?
Initially, weakness to 7,159 looks very probable. If broken, secondary comes along at 7,133 points. Stop can be at 7,220 points.
Neither calculation provides any sort of impressive drop, and we remain with a sneaking suspicion the market is just "going through the motions" in the run up to Brexit. We'd only feel justified in raised eyebrows in the event the FTSE now reverses below 6,991 points. This is very liable to provide early warning of the aforementioned toilet being flushed…
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.
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