FTSE 100 outlook: struggling at 7,000 points
Can the leading index deliver a rare positive Friday, as bitcoin yo-yos?
21st May 2021 08:52
by Alistair Strang from Trends and Targets
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Can the leading index deliver a rare positive Friday, as bitcoin yo-yos?
FTSE for Friday & bitcoin
Fridays tend to treat the FTSE 100 fairly indifferently, but for some reason our outlook for the day calculates fairly positively.
Oddly, the FTSE has prepared itself for Friday by slightly nudging to the front, hence our optimism.
Above 7,020 points suggests the possibility of some useless growth toward an initial 7,031 points. Hopefully the UK market doesn't opt to spoil the day by choosing to open for trade around the 7,031 level, as this will tend to dampen our expectations. Above 7,031 could easily trigger ongoing recovery toward 7,074 points with secondary, if exceeded, a less likely 7,127 points.
If triggered, the tightest stop loss level looks like 6,965 points.
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The alternate scenario, if everything intends to go pear shaped, demands the market weaken below 6,950. This risks triggering a reversal cycle to an initial 6,807 points. If broken, we'd hope the pattern would bottom at 6,688 points.
Source: Trends and Targets. Past performance is not a guide to future performance
Bitcoin still attracting plenty of interest
When it managed to ditch 30% of its value during an amazing session on Wednesday we were curious as to whether folk remain fascinated. Someone, somewhere, probably thought it was a solid ‘buy’ at $39,000 (£27,500) on Wednesday at noon, the price matching the low of the day. Just two hours later it had lost another $9,000, inevitably collecting a lot of 'stops' on the way down.
Once sufficient stop losses had been harvested just above the $30,000 level, the price recovered as if nothing serious had happened.
In fairness, not only bitcoin experienced a mugging. The issue spread throughout crypto-land, Ethereum being down 43% at one point. All things considered, Wednesday was a bad day for cryptocurrency. The issue now is one of recovery or more correctly, will it recover?
Presently trading around $39,600, bitcoin presents a puzzle for the reversal experienced. We had fully expected it to fall further, a suspicion which has failed to go away.
In the event of the value now breaking below $37,500 there's a distinct risk of a reversal cycle commencing to an initial $26,200 with secondary, when broken, at a bottom (hopefully) of $21,100 along with an (almost) certain bounce. We are currently unable to calculate anything below the $21,000 level, and for this reason alone would hope for a significant rebound if such a point is discovered.
To point at a return to happy bitcoin days, the price needs to move above $42,700 as this is supposed to trigger recovery to an initial $50,600. If exceeded, our secondary works out at $61,200. However, our expectations of such a secondary appearing anytime soon, are slim!
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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