FTSE for Friday: are we about to see a new trend?
26th May 2023 07:30
by Alistair Strang from Trends and Targets
Following a terrible couple of days for the FTSE 100 index, independent analyst Alistair Strang runs the numbers again, looking for clues as to future direction. He also has an update on Bitcoin.
Historically, we distrust Bitcoin but visually we’re on the edge of suspecting it intends an “amusing” strategy anytime soon, due to some recent price movements.
Since April, the price of the cryptocurrency has been paying homage to the downtrend since 2021 and, often, this sort of thing will often exhibit a typical end game. This can be risky!
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When a price becomes devoted to a trend line, matters will often conclude with a sharp ‘surprise and irrational’ movement and, in the case of Bitcoin, we shall not be aghast if it suddenly discovers an excuse to decline below $25,800 to an immediate $25,330 with secondary, if this initial breaks, at around $24,800 dollars and hopefully a proper bounce.
The interesting thing comes if any bounce exceeds Blue on the chart, where we’d hope for a visit to $30,000 with secondary, if bettered, at an eventual $40,000.
The risk element comes as this is clearly a case of trying to catch a falling knife but, in the case of something where price movements appear to be often manipulated, it can prove worth watching for the scenario unfolding.
Source: Trends and Targets. Past performance is not a guide to future performance.
The FTSE has been misbehaving this week, rarely doing anything which looked sane and now, quite worrying to note, the value has once again sneaked below the Blue downtrend which dates back to 2018.
This sort of thing is interesting, making us question whether a new trend is about to spawn as the market feels like it doesn’t have a clue what to do. From a near-term perspective, below 7,569 risks reversal to a paltry 7,555 points with secondary, if broken, at 7,500 points.
Below 7,500 risks quite a degree of pain as the FTSE enters a cycle where an eventual 7,359 calculates as bottom. The tightest stop against this scenario works out 7,650 points, wide but given the risk/reward, perfectly logical.
Our alternate scenario, should gains be planned, suggests movement above 7,650 should attempt an initial 7,680 points with secondary, if exceeded, calculating at a surprising 7,755 points! Despite this being the weekend of the exquisitely boring Monte Carlo Grand Prix, we’re inclined toward optimism for the near future, suspecting Friday shall display some FTSE recovery.
Have a good 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.
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