Interactive Investor

Is the FTSE 100 really set to top 8,000 points?

An all-time high could beckon if the index follows the examples of its overseas peers.

28th May 2021 08:49

Alistair Strang from Trends and Targets

An all-time high could beckon if the index follows the examples of its overseas peers.

FTSE for Friday

A slight thrill with the FTSE 100 (FTSE: UKX) is starting to grab our attention. 

We've shown one of our insets on the chart below, a close up of the uptrend (red line) since 2009. There's a pretty easy conclusion to be drawn of a market which is perfectly aware of this trend’s existence.

For today, when we extrapolate this trend line, the FTSE 100 only needs close above 7,029 to regain the trend. The implications thereafter are quite extraordinary, with the big picture view currently claiming the potential of recovery to a believable 7,377 points.

Despite our unbreakable belief the FTSE shall experience considerable hesitation around the 7.550 level (the pre-pandemic high), in the event the FTSE somehow trades above this initial 7.377 target, we're now able to calculate a longer-term attraction at 8.112 points.

This would represent a new all-time high for the UK, and a surprising level of confidence given the impact of Brexit and Covid-19 on the country. Our hope for the future is also built upon the FTSE following the example from other international markets, all of which it's still lagging behind.

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

As for the immediate market potentials, this week has been pretty dire, with the index continually failing to act properly when faced with downward or upward triggers.

The trading range daily has been around 40 points, which, for an index in the 7,000s, is quite a disappointment.

There's a certain threat of movement below 6,998 points forcing reversal to a useless 6,980 points. If broken, our secondary calculates at 6,930 points. Beware any trigger which occurs in the first second of trade on the FTSE as it's liable to prove a fake!

If this reversal scenario triggers, the tightest stop feels like 7,035 points.

Our alternate, the gain scenario, feels more probable. Movement above 7,035 points should make an attempt at 7,060 points initially. If exceeded, our secondary ambition works out at 7,110 points and a decent start to the bank holiday weekend.

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. 

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