How will the FTSE react post-Brexit?

It's been a rollercoaster week leading up to Brexit Day. Our analyst looks at key outcomes for FTSE.

This week the FTSE 100 felt like it’s had a similar complaint to the my animals, one day feeling okay, the next utterly foul.

We’ve a vague hope, similar to our household pets, it shall make recovery with a ‘so what was bothering you’ action.

The market closed Thursday in a position where it becomes relatively easy to extrapolate a reversal cycle to 6,700 points.

If broken, secondary calculates at a “must bounce” bottom of 6,400 points.

If we opt to draw lines on charts, the current scenario allows this, the market needing above 7,460 to cancel the concept. Of course, as usual, we’ve got a ‘However’.

Brexit has never happened before, so there’s no playbook telling us what to expect. In fact, the reality of an 11-month exit period is liable to make 2020 interesting, as rumour versus reality should constantly happen while negotiations progress.

In addition, the low experienced on Thursday was a point at which we’d ordinarily hope for a rebound, so we’re going to look for miracle recovery signs for the FTSE near term.

The UK market, unlike one of the Golden Retrievers, is unlikely to try climb inside the dishwasher, a game she plays when her appetite is normal.

But should the FTSE manage above a near term 7,402 points, it calculates with an initial ambition at 7,438 points.

If above this level, further computations return 7,490 as a target level. We’re not confident about such a number, due to the immediate downtrend being at 7,460 and almost certainly capable of provoking hesitation in movement.

Source: Trends and Targets      Past performance is not a guide to future performance

Now we’ve spent time pretending optimism, what happens if the FTSE makes its way below 7,357 points?

Initially we are looking at reversal to 7,309 points with secondary, if broken, down at 7,280 points.

As always, beware a spike down at the market open on Friday morning as such will doubtless be an indication of a recovery day ahead!

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.