Essential FTSE levels to watch
13th August 2018 10:58
by Alistair Strang from Trends and Targets
August can be a boring month for the FTSE index, which is why chartist Alistair Strang is looking ahead to what might be on the horizon.
The FTSE. A big picture view (FTSE:UKX)
Every now and then, we feel the need to torment ourselves by looking at the FTSE since 1995. The index has certainly provided entertainment over the years and now appears to be heading for pastures new.
A favourite in-house approach is fairly basic. "If it were a share, what would we expect?"
In the case of the FTSE, the ruling argument favours 8,750 as a sane future point where some stumbles should occur. The only thing more ridiculous than this calculation is the width of drop needed to cancel the number. At present, the FTSE requires a slip below 6,280 to nullify the growth equation!
We've painted the historical glass ceiling at 6,900 points and thus far, from a chart perspective, the index has done everything right.
Once the market broke upward, it achieved a series of new highs before "testing" the prior glass ceiling (no idea why this should happen). Since testing the historical ceiling, the index has again moved higher - for two days - and is now just waiting sufficient excuse to better 7,904 points and commence some further acceleration.
That's about the end of any immediate positive spin on things as despite all these healthy growth ambitions, we rather suspect some relaxation shall be required first.
Unfortunately, the immediate situation is the index requires a break below 7,490 to confirm our fears, bringing 7,360 into view. A drop such as this, while spectacular, would do nothing to alarm us.
Below 7,360 would give cause for concern, suggesting somewhere around the 7,100 level as a viable bounce point. For now, it's August, it's boring, and if you're in Scotland, it's also raining constantly. Roll on mid-September.
Source: interactive investor 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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