Is the FTSE 100 really heading to 5,600?

Our chartist assesses the risk of a sharp fall for the Footsie, plus sterling against the Russian ruble.

FTSE for FRIDAY and GBP vs Ruble

Our world famous “FTSE for FRIDAY” continues to attract surprising viewers. Currently Russia ranks as #5 in our Top Ten visitor sources, thus deserving an attempt to reciprocate the interest.

Thankfully, Reunion Island in the Indian Ocean also remains a regular attendee in our Friday traffic sources, a travel ambition which shall doubtless remain unfilled (travel insurance issues).

For a while, it was looking like UK Sterling intended to strengthen quite firmly against the Ruble. Presently trading around the 96 level, the pairing needed only exceed 101 to trigger movement to an initial 104 with secondary, if exceeded, at a longer term 109.

Perhaps of greater importance, this would place the relationship in a position where a long term 114 becomes believable, challenging the all-time highs of four years ago.

Needless to say, anything involving sterling at present is fraught with danger, doubtless due to risk around Britain and its reputation during Brexit negotiations. This has created the situation where weakness on GBP:RUB below 94 risks provoking reversal to an initial 89, something which makes visual sense. We’re less confident about our secondary calculation, down at 79.

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

FTSE for Friday

Despite some recent gains in the UK market, it’s not in a happy place thanks to the FTSE 100 index doing everything to signal it intends to bottom around the 5,600 level. Everything, that is, except actually drop to the target level.

The index does require above 6,200 points to escape this immediate danger and we suspect, while the threat remains, short positions shall continue to outperform whereas long positions shall continue to fall short of targets.

No-one ever said the market is a simple place, but we feel it wise to tailor expectations in accordance with the market’s mood. Grimly holding on for a Long target level to appear risks disappointment, if the index changes direction before reaching whatever ambition was in place.

The immediate situation suggests strength above 6,034 points should make an attempt at an initial 6,103 points. If bettered, our secondary calculates at 6,211 points and an attempt against the Blue trend line on the chart below.

If mischief is planned, the FTSE needs to dribble below 5,942 points as this looks capable of triggering reversals to an initial 5,891 points. If broken, our secondary works out at 5,822 points.