Interactive Investor

Here's where the FTSE 100 can rebound

Faced with market silly season, our chartist attempts to work out where the top flight is heading next.

2nd August 2019 10:07

Alistair Strang from Trends and Targets

Faced with market silly season, our chartist attempts to work out where the top flight is heading next.

FTSE for Friday (FTSE:UKX)

We're now in that horrible time of the year, when some idiot says "how many shopping days left until ...." whereas for traders, it's "how many market sessions until I stop pulling my hair out!"

While the markets are always mad, this year exhibits a new type of insane, one neatly shown on Thursday 1st August.
 
Our beef came from market movements once the FTSE 100 closed for the day. We'd given trigger levels for the US markets, all of which managed to be exceeded in the period before 6.30pm.
 
Quite literally, triggers were exceeded briefly by a couple of points, then it felt like someone hit the pause button.
 
News from the USA which proved perfectly capable of trashing the Futures left an unpleasant taste as it almost felt like the markets deliberately exceeded logical trigger levels, thus capturing a bunch of orders prior to a plunge.
 
It begs the question, isn't this called "entrapment" in legal terms?

It can be assumed we were not amused; writing "shambles" so many times in our prior results column was not enjoyable.

This particular article is supposed to be about "The FTSE for Friday" but we're a little perplexed at what the future holds. At time of writing, FTSE futures are trading around 7,490 points whereas the FTSE closed the session at 7,581 points.
 
Will the FTSE, therefore, open nearly a 100 points down?
 
If there any point in writing "Movement now below 7,535 (the opening second spike down on the 1st) looks capable of an initial 7,486 points." After all, FTSE Futures have already reached such a level whereas the FTSE itself has not.
 
The real problem for the FTSE starts, if 7,486 breaks as further reversal down to 7,323 points looks valid. However, there is a pretty fair chance the market shall experience a short lived bounce around 7,425, due to the presence of the prior downtrend.
 
We suspect the market will probably make its way down to the 7,486 level and perhaps bounce a little. If this is the case, movement to an initial 7,540 shall make some sense. If exceeded, secondary is at 7,558 points.
 
Should this level be bettered (remembering, we are speculating on a FTSE bounce from a level the market has not even dropped to yet!) there is a more than fair chance the drop has been an over-reaction to whatever Mr Trump did.

Curiously, any reach down to 7,323 will tend to suggest a coming donk against the red uptrend, one which should generate a reasonable rebound.

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. 

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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