FTSE Technical Highlights:
- FTSE consolidating recent gains quite well
- Poised to run to best levels since March
- 2018 low/June high lie just ahead
The FTSE 100 has been consolidating its big run from the first half of the month, looking poised to add to those gains in the sessions ahead. The base isn’t the biggest given the extent of the run, but nevertheless it is a bullish development that should bring an important test of resistance into play.
The 6530-area could prove to be a formidable spot for the FTSE to break on through. The June high was carved out just ahead of the 2018 low, when stocks bottomed at the very end of that year following a big swoon. We also saw a very short-term bounce in March develop from this same area. Indeed, the 6530 area is a spot to watch.
How price action plays out at that juncture, assuming it reaches it, will be important for the near-term at the least. If a break into resistance results in a rejection, then perhaps we will see a larger retracement unfold.
A break on through to the other side doesn’t necessarily mean momentum will pick up, but it will have higher levels in focus as material resistance isn’t readily found until near the 7k mark where a couple of lows formed last year.
All-in-all, the FTSE appears ready to rise some more, but how it responds to a big longer-term test will be important to pay attention to. Shorts don’t much appeal at this time; however, a turn from around resistance could provide a decent risk/reward set-up for would-be sellers.
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FTSE Daily Chart (short-term consolidation)
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—Written by Paul Robinson, Market Analyst
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