Interactive Investor

FTSE for Friday: an optimistic outlook for the blue-chip index

Independent analyst Alistair Strang shares what the charts say about the FTSE 100’s prospects.

31st May 2024 09:00

by Alistair Strang from Trends and Targets

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Thursday was a strange day, the FTSE 100 showing further upwards movement, while the US threw a bit of a tantrum.

Here in the UK, even AIM is starting to give positive signals for the rest of this year, making a visit to 860 points fairly believable with the obvious potential of many AIM components starting to do something useful.

Unfortunately, until such time that the AIM is trading above 980, it will remain at risk of the markets whims but, visually, we like how it looks.

Needless to say, weve got a however and it comes from the Dow, a market tottering on the edge of reversals to around 35,500 points. It hasnt ticked the final box yet, but the chart visuals are not pleasing, making it feel like the US is only a bad news story away from provoking reversal of a few thousand points.

As for the FTSE, it is now trading in a zone where we cannot be aghast if it eventually finds its way to 8,600-plus points. The UK would need below 7,600 points to spoil the party.

FTSE for Friday chart

Source: Trends and Targets. Past performance is not a guide to future performance.

For now, despite some fun and games this week, the FTSE looks capable of presenting further upward travels.

Above 8,255 points near term apparent should trigger movement towards an initial 8,324 points. Our secondary, should this initial ambition be exceeded, calculates at an eventual 8,369 points. If triggered, the tightest stop looks like 8,205 points, fairly wide but about what could be expected given the risk/reward potentials.

Our converse scenario, if things decide to go wrong, suggest below 8,204 points triggering reversal to 8,182 with our secondary, if broken, working out at 8,153 points and an almost certain rebound.

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. 

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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