Interactive Investor

FTSE 100 wants to hit this level soon

26th October 2018 08:49

Alistair Strang from Trends and Targets

In a topsy-turvy week that has seen the blue-chip index fall to a seven-month low, chartist Alistair Strang tells us where he thinks it's heading next.

FTSE for Friday (FTSE:UKX)

For quite a while, we've been demanding the FTSE 100 close below 6,955 to justify concern for the index's future. Despite a pretty nasty week, the lowest the FTSE closed (so far) was 6,955.21 points. Perhaps it's not doomed?
 
We've some fairly solid doubts as to the potential for any miracle recovery. The index closed Thursday at 7,004 points, presently requiring above 7,230 to once again recover above the Brexit Vote red uptrend.

Until such an event occurs, the market is loitering in a region where 6,635 presents itself with some bottom potentials.

From an immediate perspective, the FTSE requires movement above 7,005 points to generate traffic to an initial 7,058 points. In the event of this level being bettered, there's a slight chance bottom is "in" and further recovery to 7,076 becomes very possible. If triggered, the stop requirement is pretty wide at 6,930 points.

In theory, bettering 7,076 does plant the FTSE in a region with the promise (threat) of further traffic to 7,218 points!
 
However...
 
We're not convinced. At present, any weakness below 6,930 looks capable of generating downward travails in the direction of 6,878 points.

If broken, secondary is a pretty massive drop down to 6,635 points. If triggered, stop can be 7,004 at tightest.

In summary, we rather suspect the market's intention is to eventually reach 6,635 and bounce. The implications below 6,635 are seriously unpleasant.

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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