Has FTSE 100 just flagged a 200-point rally?

by Alistair Strang from interactive investor |

Exceeding this level could provoke significant upside for the blue-chip index, says our charts expert.

FTSE for FRIDAY

A car journey the other evening reminded, sharply, that the value of investments can go down as well as up! The car, an automatic, decided if you press the accelerator pedal the engine will stop!

Unless you are in reverse in which case it worked perfectly. It proved a truly surreal experience, reversing one mile home, at night, during a storm with 70mph gusts.

When the thing was again in the driveway, I looked around in expectation of a Top Gear bloke with a white coat, offering the next challenge. But, truthfully, it felt like one of these share price journeys where it goes up, only to reverse to where it started.

We wonder, with the news that Brexit may be delayed, whether the FTSE 100 index is about to embark on one of these journeys which shall go nowhere?

From a near-term perspective, it appears movement now above 7,220 points can be expected to provoke a challenge of 7,247 next. If bettered, secondary calculates at 7,285 which would prove quite a big deal, dumping the index in a region where we'd expect a longer term "top" at 7,400 on the current cycle. 

It will certainly prove curious, if this coincides with any mooted Brexit extension period, carrying the expectation a bloke in a white coat will hand the FTSE its next challenge around such a point.

The other side of the coin comes – allegedly – if the FTSE makes its way below 7,179 points as reversal to an initial 7,154 is possible. If broken, secondary calculates at 7,082 points. 

A fly in this ointment comes, if the FTSE is truly entering an uptrend. It will tend to make reversals hard to achieve as reversals shouldn't reach target.

The cliche, "we live in interesting times" is difficult to justify as the ongoing Brexit shambles is proving anything but interesting.

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, Shareprice, 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, and 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.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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