Bottom line: FTSE long term structure remains bearish against 7724 resistance. Over the near term as well, the indice has successfully carved lower highs around 6300/50 levels. Bears might be poised to remain in control and a push below 5750 would be encouraging.
Fundamental Outlook:
FTSE has managed to close the last week marginally high by +0.38%, closing around 5970 mark. The indice would be taking its cued from global indices Dow Jones, SPX500 and NASDAQ over the next several weeks as risk assets remain vulnerable for another round of selloff. Also the probability of a hard Brexit might induce further volatility and selling pressure.
Technical Analysis:
FTSE managed to recover some lost ground over the last week as the indice pushed higher towards 5900/50 mark. It had earlier dropped through 5760/70 lows before finding some support. Immediate short term resistance is seen through 6130 mark as bears prepare to stay in control.
FTSE had earlier dropped from sub 7700 highs through 4750 in March 2020. The entire drop was an impulse wave, which has been retraced by a corrective rally towards 6500 levels in June. Since then, the indice has been carving series of lower lows and lower highs.
Further, the indice has also managed to carve 6300/50 potential resistance and counter trend rallies are expected to stay capped below that mark. Also note that recent price action has been that of a decreasing resistance and constant support around 5750/70 mark.
A break below this wedge formation might be encouraging to bears as they target to push through 4750 lows in the next several weeks. Alternately, if 6300/50 resistance is taken out, it could change the bearish view over the short term.
Most traders might be preparing to initiate fresh short positions around 5900/6000 resistance zone, with protective stops above 6350 handle and projected targets below 4750 levels respectively. Watch out for a break below 5750, for further acceleration lower.
Prepared by
Harsh Japee, Technical Analyst.
FTSE Chart
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