Interactive Investor

How FTSE 100 and Dow Jones can escape this trading range

Yesterday, the US index made gains, but it appears trapped. Our chartist explains a way out.

31st March 2020 08:43

Alistair Strang from Trends and Targets

Yesterday, the US index made gains, but it appears trapped. Our chartist explains a way out.

We've reported our conclusion that the markets risk being trapped for a while, stuffed into a trading range while we await the next major push (it could be up, it could be down).

Monday proved such a day, the FTSE 100 swinging from nearly 2% down to end the session nearly 1% up.

Visually, there's a risk that the market intends on being trapped between 5,350 and 5,800 points or so.

At present, if the FTSE somehow manages above 5,935 points, there's a pretty strong chance the rise shall prove genuine.

A movement such as this risks triggering a further 500-point surge upward.

Early warning for a miracle looks like movement now above 5,822 points.

Equally, below 5,470 risks providing early warning for reversal toward 5,260 points.

Confirmation shall be regarded as coming, if the index wanders below 5,350 points.
 
As for Wall Street, it has parked itself for the last three sessions, trapped in a useful 1,100-point range between  21,400 and 22,500 points or so.
 
Movement now above 22,380 is supposed to be capable of a lift to an initial 22,492 which is believable.

If exceeded, secondary calculates at a more dubious 22,845 points.

While writing this, news of a US Navy hospital ship docking in New York harbour has appeared, a distance just eight miles from Wall Street.

The alternate, and more likely, scenario is of weakness now below 21,830 taking Wall Street down to 21,486 points.

If broken, secondary calculates at 21,260 points.

This is dangerous (and risks breaking the "parked" theory, driving the US index into a region where it could swiftly lose a further 700 points.
 
We live in interesting times.

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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