FTSE 100: This is when we'll know that a bottom is in
10th December 2018 08:40
by Alistair Strang from Trends and Targets
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The UK blue-chip index is being buffeted by Brexit and trade wars, but it will bounce at some point. Technical analyst Alistair Strang reveals his latest forecast.
FTSE for Monday (FTSE:UKX)
According to the media, the UK is poised to kick open the gates of hell anytime soon. As a result, there are supposed to be some "short" opportunities for the index, along with sterling too.
While we should warn the markets rarely do "obvious", we've been whinging about parity for sterling for ages and a bottom of 6,640 on the FTSE 100.
The drop last week which achieved 6,670 was certainly pretty close to our ambition but we're not convinced we've witnessed "sell on the rumour" completed properly. After all, the next phase is supposed to be "buy on the fact" in a falling market. (The exact converse is true, when optimism is driving a rise - buy on the rumour, sell on the fact)
Certainly, recent months have seen "the rumour" manifest as Project Fear, a deliberate campaign to sew terror ahead of Brexit. The situation now risks weakness below 6,670 driving the FTSE down to 6,580 next. If broken, secondary is at 6,502 where some sort of bounce is expected.
In a slightly more positive vein, above 6,884 points will give an early indication the recent visit to 6,670 was sufficiently close to our postulated bottom.
This should justify movement to 6,957 initially, along with a probable stutter. If bettered, secondary calculates at 7,094 points.
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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