Interactive Investor

How FTSE 100 could attack new high

8th May 2018 08:41

Alistair Strang from Trends and Targets

FTSE for this week (FTSE:UKX)

Despite a fair probability of Tuesday pretending it's Monday and providing an inconsequential start to the week, we're fairly optimistic as to what the future holds. At least for the near term! Perhaps it's the good weather, but things appear to want to continue upward.

Our inclination is to suggest 7,585 as a reasonable trigger level for the near term. It appears the FTSE 100 now bettering such a point should bring travel toward 7,725 points.

Such has been the pace of recent acceleration, the market needs to slip below 7,515 just to give the first signal of a pending slowdown. Above 7,725 points and we shall start viewing 7,785 points nervously.

The chart below gives ample reason to explain nerves.

At the start of this year, the FTSE manages to close at 7,778 points, this representing an all-time high for London. Should the index once again stumble at such a level, there's a very real risk of the market deciding "that's it, not going higher".

This attitude tends create a self-fulfilling prophecy, perfectly capable of challenging the immediate acceleration trend or, more probably, the post Brexit Vote uptrend (dashed red line on the chart), which currently lurks around 7,050 points.

For now, absolutely nothing suggests this trend is anything other than a line on a chart!

What will happen, should the immediate 'red' uptrend be broken?

Probably very little, but closure below red is risky, allowing weakness to 7,410 points initially. If broken, secondary comes along at 7,350.

For now, we're inclined to optimism.

Source: interactive investor              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. 

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.

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 to buy or sell any financial instrument or product, or to adopt any investment strategy as it 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.