FTSE for Friday: time for main index to prove itself

The UK's top index must close above this level for any gains to have integrity.

Our popular FTSE for Friday & BNP Paribas too!

Frustration at lack of action in the UK financial sector made us curious as to how things are going in Europe. The world's eighth-largest bank, BNP Paribas (EURONEXT:BNP), is an obvious contender, their share price threatening to exceed the high before Covid-19 fouled up the markets. As both the Stoxx 50 and the CAC40 indices already have exceeded this benchmark, our suspicion is for financial elements to follow, leaving the UK even further behind.

For BNP, it closed Thursday at €53.83, a tiny amount below the critical €52.18 closing trigger we’re hoping for.

• Why reading charts can help you become a better investor
• Check out our award-winning stocks and shares ISA

Perhaps this shall not prove a big deal, the share price only needing trade above Thursdays day high of €54.58 to hopefully point at near term traffic in the direction of €56.12. Our inclination will be to view €56.12 as significant, as the Green line on the chart explains.

Reaching this level shall provide a solid definition of “higher high”, launching the share price into a region where a longer term cycle toward €60.62 is believable. In this instance, we can also give a third level target at €67, an ambition which is visually believable.

If BNP intend go horribly wrong, the share price requires below €45.6, but only if it intends emulate UK banks by languishing in the gutter of despair. We’re inclined toward some hope.

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

FTSE for Friday

With spectacular levels of misplaced optimism, we started April by speculating whether the FTSE 100 would follow the French model, maybe commencing a lunge toward the pre-Covid highs of 2020. The core element for this belief was an expectation the UK would doubtless mess around for a few weeks before finally heading north, perhaps with the FTSE experiencing an 8% gain in the process.

At time of writing, the FTSE is at 6,961 points. When we wrote our gullible article, it was at 6,942 points. By our calculations, a 19-point movement on the FTSE is rather a lot less than an 8% gain and we’re not amused. Self defence demands we admit timeframes are rarely a strong suit when applied to stock markets, but we’d hoped for something more substantial in the way of a rise. The present situation demands the FTSE close above 7,052 points before we dare believe any gains are being made with integrity.

From a near-term viewpoint, the FTSE needs to exceed 7,025 points, and this should trigger positive in the direction of 7,052 points with secondary, if exceeded, calculating at 7,092 points. If triggered, the tightest stop looks painfully wide at 6,955 points.

Alternately, and alas, more likely, is the risk of travel below 6,952 shall now provoke reversals to an initial 6,910 points with secondary, if broken, working out at 6,859 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.

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.