FTSE 100: big risks for the main stock market index

by Alistair Strang from Trends and Targets |

Share on:

Will brave tourists have more euros in their pockets this summer, and what might the FTSE 100 do next?

FTSE for Friday & GBP vs EURO (FTSE:UKX)

Some addictions are easy to break. But will Brits’ addiction to holidays in Europe make itself apparent, or will the Great British Pound vs The Euro remain trading in doldrums territory, the pairing not doing a lot since April?

Trading around €1.1050 presently, the relationship only needs to firm up above €1.1091 to suggest some recovery coming to an initial €1.1194 with secondary, if exceeded, at a pretty confident looking €1.1449.

For some reason, the market has expressed hesitation at the €1.1500 level repeatedly since the Covid-19 drop, common sense suggesting it'll doubtlessly happen again.

Only above €1.15 and we'd argue quite firmly in favour of continued recovery to €1.1928, hitting the pre-Covid-19 price level.

Should things opt to go pear shaped, below €1.09 looks troublesome as €1.0677 remains possible with secondary, if broken, at a bottom hopefully of €1.015.

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

FTSE for FRIDAY (FTSE:UKX)

Thankfully PayPal (NASDAQ:PYPL) quickly proved why we opted to write about it on Thursday.

It's hopefully worth paying attention when we drag an oddball out to comment as usually it means we've spotted something useful.

Things are rather more difficult with our regular "FTSE for Friday" feature as sometimes we don't have a clue where to start. 

Thankfully, this time around, we've rather a lot to write about, but our enthusiasm is slightly dampened by the UK market briefly sneaking below 5,930 points on Thursday.

We'd been expecting 5,930 to make an appearance for quite some time, an ambition constantly frustrated by a stock market anxious to prove (again) our grasp of timeframes was tenuous.

We'd again reminded clients of the 5,930 threat in our private gossip on Wednesday, not for a movement expecting the drop to happen the following afternoon.

But the moment the FTSE 100 slithered below 6,068 points, the ruling drop potential became inevitable.

But there's a problem.

The FTSE did not bounce at 5,930. Instead, it bounced at 5,924 points and we've discovered, far too often, such pedantic breaks can prove truly important as they frequently imply ruling weakness.

As a result, the threat exists of weakness below 5,924 points bringing further reversal to an initial 5,858 points with secondary, if (when) broken at a bottom and hopefully, a proper rebound at 5,640 points.

Nothing suggests this should all occur on the same day but, as mentioned previously, our grasp of time is dodgy.
 
The contra scenario suggests paying attention should the UK market strengthen above 6,008 points (though distrust an upward spike in the opening second of trade) as it allows for recovery to an initial 6,057 points with secondary, if bettered, calculating at 6,141 points.

We do suspect, near-term, some recovery is probable, though next week risks being pretty grotty.

Have a good weekend and enjoy Silverstone on telly!

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. 

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation, and is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

get more news and expert articles direct to your inbox
Sign up for a free research account and get the latest news and discussion, and create your own Virtual Portfolio