Technical Update - FTSE250 in free fall reaching support from 2020. FTSE100 testing key support. Will it hold?
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Mid-cap Index FTSE250 has been hit hard by heavy sell-off down to 2020 support level. A minor pause is likely but selling pressure likely to resume taking the Index lower.
FTSE100 is below 7K testing key support. If it breaks a sell-off is in the cards down to around 6,400
FTSE 250. Sell-off last week pushed the mid-cap index to the 1.764 projection of the August correction at 16,671. And to test the lows of the consolidation area from 2020 at 16,707 bouncing back above the 0.618 retracement at 16,950.
Weekly RSI is showing divergence, but trend is down in FSTE 250. If FTSE 250 breaks below last week’s low at 16,650 a sell-off down to support at 15,194, possibly dipping below 15K is not unlikely.
FTSE 100 closed last week below key support at 7K and is just a few pence from testing key strong support at 6,788 – see weekly chart.
If FTSE 100 closes below 6,788 it could trigger a sell-off down to the support area at 6,484-6,397. Possibly dipping to the 0.618 retracement at 6,351.
FTSE 100 has over the past 1-1½ year formed a double/triple top like pattern (not the most perfect one!) As a rule of thumb when a double/triple top pattern unfolds and is confirmed by a close below the deepest valley in the pattern in this case it would be 6,787, price can move the same distance at the high to low distance of the pattern. The deepest valley of this pattern is 6,787 and if FTTSE 100 closes below there is a potential target of 6K, indicated by the two vertical arrows.
However, since this is not the most perfect pattern the target price might be closer i.e., the support area around 6,484-6,397.
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