Which way will the FTSE 100 sail on 22 May 2020?

by Alistair Strang from Trends and Targets |

The market appears somewhat becalmed. Our chartist looks for potential catalysts on the horizon.

When we drill down to minute-by-minute FTSE 100 movements since the coronavirus pandemic hit its (initial?) bottom in March, something quite fascinating appears.

We can calculate a glass ceiling at 6,103 points and, surprisingly, the market seems to acknowledge it is there, despite Covid-19 hysterics mixed with the UK PM and his amazing invisibility cloak.

Back in April, the FTSE managed to actually close a session above 6,103 points and again, on 19 May, the FTSE was spiked in the opening second above this level.

While neither movement was to prove viable in generating recovery, they each contributed to our calculation which highlights 6,103 as something important.

As a result, the situation now suggests closure above 6,103 or movement above 6,155 (the high from April) and we shall now regard the FTSE as heading up to an initial 6,450 with secondary, if bettered, at 6,650 and a strong suggestion of some hesitation.

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

To return to the immediate, how does Friday look? Quite an intimidating number of folk view this weekly report and a market experiencing a 100-point trading range for the last week certainly makes us nervous.

Near-term, movement above 6,094 points is supposed to promote recovery to a useless initial 6,120 points.

If exceeded, secondary calculates at 6,149 points though, there is a very real chance any positive mood on the market could continue a drive up to 6,186 points.

The alternate scenario allows for weakness next below 6,000 points driving reversal to 5,962 initially with secondary, if broken, at 5,915 points.

As the chart below shows, neither ambition is particularly threatening, with the UK market needing to break below 5,800 to justify visiting the underwear department when next doing online shopping.

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. 

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