FTSE 100: Life gets more interesting at this level

While not bursting with optimism, our chartist expects to see 7,300 if the index does this. 

FTSE for Friday

The FTSE 100 index experienced a flamboyant Thursday by any standards but we're concerned it did not exceed 7,200 points.

The high of the day proved to be 7,199 and, while market futures hit our initial lunchtime projection pretty exactly, we were not filled with confidence, instead worrying that the FTSE was simply going through the motions in sympathy to other world markets. Basically, we would have expected better on the day.

We mentioned recently our rule of thumb, where an initial surge exceeding a target gives a pretty solid clue for what's coming next. While the FTSE matched our target on the initial surge, it failed to better it.

Even FTSE futures, normally gifted with excess, only achieved 7,200.08 on the initial surge to target.

We're therefore not bursting with optimism for Friday.

Movement on the FTSE above 7,201 should reach a boring sounding 7,218 points. If exceeded, life becomes more interesting as the secondary calculates at an amazing 7,301 points!

Visually, we would expect some hesitation around the 7,237 mark, due to the presence of prior highs recently.

If triggered, the very tightest stop is at 7,163 points but realistically, we'd prefer wider at 7,144 points - or even 7,126 if embracing true paranoia.

What happens if the FTSE breaks below 7,126 points? The next bit requires a stop level at 7,190 points.

Initially, we're calculating the potential of reversal to an initial 7,089 points. At this point, it gets nasty as any break below this level risks a longer term cycle down to 6,996 points.

Importantly, we're at the end of a month and things tend to finish with a flourish.

It's the Belgian GP this weekend, welcome relief from the chaos which is apparently the UK.

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, or interactive investor will be responsible for any losses that may be incurred as a result of following a trading idea.