Technical Analyst, Saxo Bank Group
FTSE 100 is doing better than the FTSE 250. However, it has broken below the key support at 7.000 and is likely to test the support at 6,823. If taking out the trough from March this year at 6,787 the selling pressure could accelerate pushing the Index down to support area at 6,484-6,397 and the 0.618 retracement at 6,351.
RSI is back below 40 and if closing the week below it supports bearish outlook.
FTSE 100 has over the past 1-1½ formed a double/triple top like pattern (not the most perfect one!) However, 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 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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