Interactive Investor

FTSE 100 regains its uptrend

13th August 2021 09:47

Alistair Strang from Trends and Targets

Our technical analysis expert considers the status of the UK's top index as the week draws to a close.

'The Glorious 12th', once again brought the start of the grouse season here in Scotland but the hills locally were mercifully quiet, everyone staying indoors to watch the FTSE 100 making a further attempt at becoming airborne.

Or perhaps the hills were peaceful, due to the local grouse & pheasant factory massively reducing production of cannon fodder. This was due to the uncertainty of permitted activities, thanks to the pandemic.

The hunt for grouse, while coming with the pretence it's a challenge against wild birds, tends forget the animals are farmed, released on a moor, startled by beaters, then shot. It's certainly one of these occasions where the birds probably regret learning to fly.

The farmed grouse & pheasant, in normal years, can be a nuisance on the roads locally. They tend forget their preferred future intentions, instead opting to ambush unwary motorists driving past the pheasant farm, doubtless finding it hilarious watching a tourist plant their car or mobile home into a ditch while discovering single track roads don't afford much room for manoeuvre.

This year, driving past the estate which grows the traffic hazards has been a pleasure, an almost complete lack of suicidal pheasant.

The tenuous link, continuing to ask the question "Will The FTSE Fly or will it be shot down?" currently has a fairly optimistic theme, the London market continuing to feel like there is an upward underlying cycle.

However, near term below 7180 looks slightly problematic, calculating with the potential of reversal to an initial 7150 points. Given the FTSE closed the 12th at 7193, this obviously is not a massive drop requirement to the trigger level.

In the even 7150 breaks, we would hope for a proper bounce at our secondary of 7127 points. We do have considerable doubts as to the reversal potential, thanks to the blue downtrend on the chart.

The market broke above this downtrend on Wednesday and, in addition, rather a lot of shares we monitor hit upward triggers. Despite what has felt like an effort to slow down the pace of rises, we'd hope the FTSE intends remain above the pandemic downtrend.

Further feeding our excuse to suggest a cheery future, the FTSE has managed, somehow, to regain its previous uptrend, trend #7 since October last year.

Generally, when a price breaks below, then actually returns above a trend, there's a pretty solid excuse for optimism. In the case of the FTSE, above 7222 points suggests ongoing traffic in the direction of 7251 points. If bettered, our secondary works out at 7357 points.

To spoil the party slightly, the FTSE still needs better 7550 to justify some fizzy wine as the London market will join the rest of developed world in exceeding the market level, prior to the Covid-19 drop last March. Have a good weekend, even though we need wait another 2 weeks for the next Grand Prix!

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.