FTSE for Friday: why I'm a little nervous

27th August 2021 07:20

What’s in store for the UK index as the holiday month of August comes toward a close?

At time of writing, the FTSE 100 is at around 7,124 points, a country mile away from challenging the pre-pandemic highs around 7,550 points and in doing so, joining the rest of the civilised world in becoming useful.

At present, there appears very little inclination for the market to behave properly and, given Thursday's fun and games, we’re becoming a little nervous.

The 40-point spike down at the market open, followed by ever decreasing lows, appeared to follow no logic. Perhaps it was simply a spiteful attempt to inhibit the FTSE from actually doing anything positive as the holiday month of August comes toward a close.

The situation now risks being fairly unpleasant if the FTSE meanders below 7,095 points, as reversal to an initial 7,071 looks very possible.

Should this level break, a more serious risk of ongoing reversal to 7,003 points calculates as possible. If triggered, the tightest stop level looks like 7,130 points, a reasonable number given the risk/reward parameters. Amusingly, should this play out, it will represent the eighth time a FTSE uptrend has broken since November last year.

Our alternate scenario comes if the FTSE manages above 7,147 points, as this should produce movement to a pretty tame 7,162 points. If bettered, our secondary works out at 7,194 points. The tightest stop looks like 7,107 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.

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