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Technical Update - FTSE 100 and 250 above falling trendline. Will it continue higher? Strong resistance ahead
Kim Cramer Larsson
Technical Analyst, Saxo Bank Group
FTSE100 (UK100 cfd) and 250 testing trend line in falling wedge pattern. If closing above there could be further upside. Strong resistance ahead is likely to cut the rebound short.
Covered in this article: FTSE100, FTSE250 and UK100cfd
FTSE100 is at the time of writing breaking the steep falling trendline in what looks like a wedge. If closing the day above FTSE could extend its rebound to test 7K possibly shooting up to key resistance at around 7,088. Divergence on RSI suggest higher levels on the Index but if selling pressure resumes and RSI breaks below its lower rising trendline the rebound scenario is likely to be demolished
If the positive mood fizzles leading FTSE to close back below the falling trendline selling pressure could resume pushing the Index to new lows
Medium-term trend is still down (see weekly chart) and if key support at 6,788 is taken out FTSE 100 could drop to the strong support area at 6,484-6,397.
Weekly RSI below 40 supports the bearish outlook.
Similar picture on UK100 cfd/FTSE future. Testing the falling trendline. Resistance at 7,103. If selling pressure resumes and RSI breaks below rising trendline lower levels below last week’s low at 6,704 is likely.
FTSE 250 is having another go at closing above the falling trendline after failing Friday. If it succeeds this time FTSE250 could test resistance at 17,822. A close above and 18,288 is next resistance.
If buyers cannot keep FTSE250 and has to let it slide back, a close below last weeks low at 16,520 is likely to fuel another wave of heavy selling.
The low last week was a bounce from strong support at around 16,707. A close below that level is likely to make the Index be hit by heavy selling down to around 15,194
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