FTSE 100: why this analyst is preparing for the worst
Historically, the UK stock market isn't a generous entity. Our chartist sees where things could go.
28th August 2020 09:46
by Alistair Strang from Trends and Targets
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Historically, the UK stock market isn't a generous entity. Our chartist sees where things could go.
FTSE for FRIDAY (FTSE:UKX)
Numbers are important. It's two days until the next Grand Prix, while two weeks ago my heart decided to try a different beat rather than ‘the rhythm of life’ and the FTSE 100 nearly closed two points below its last lowest low. Okay, 1.9 points for the pedants.
We've a thing about ‘lower lows’, even when they appear contrived.
Quite how the FTSE managed to close a session at 5999.99 points amazed us but yes, it was below the prior low on August 21st of 6001.89 points.
This means we must now prepare for the worst, despite the market almost being at the end of the month, along with the UK facing a long weekend of traffic jams for the final bank holiday of the year.
So what does this danger signal mean?
Apparently movement next below 5,988 points should trigger a reversal cycle toward an initial 5,895 points with secondary, when broken, at a bottom hopefully of 5,758 points.
What fascinates about this large haul of points is the tightest stop level working out at 6,042 points.
We're smelling a bit of a rat, thanks to it being the end of a month, a holiday weekend, a Friday, and a more than reasonable risk/reward scenario.
Historically, the UK stock market isn't a generous entity!
And what happens, if the market does indeed make it above 6,042 points?
We're looking for recovery to a fairly tame 6,058 points initially with secondary, if exceeded, a more promising 6,110 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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