Technical Update - FTSE 100 and FTSE 250 testing resistance levels. Correction is in the cards
Kim Cramer Larsson
Technical Analyst, Saxo Bank Group
FTSE 100 reached the 0.764 projection of the double bottom last week. There is divergence on RSI (Divergence is when the price is making a new high/low and the RSI is not making a new high/low i.e., the peaks and troughs price vs. RSI pointing in different direction) That is sign of trend exhaustion and indicates FTSE 100 could have peaked.
However, if FTSE closes 7,409 the uptrend could extend to 7,578 possibly 7,670.
If FTSE slides back and closes below 7,244 Bears could get a second wind pushing the Index down to around 7,100
FTSE 250 is being rejected at the 200 daily SMA and resistance at 19,616. A correction should be expected. A correction that could test the medium-term falling (black) trendline and short-term rising trendline. If FTSE 250 closes below 18,493 selling pressure could accelerate pushing the Index lower.
However, there is no divergence on RSI indicating higher levels could be seen, possibly after a correction. If FTSE 250 closes above 19,722 20K is to be tested but there is room up to around 20,467.
The medium-term falling trendline has been broken and a close above 20,467 will reverse the medium-term bearish trend. See weekly chart.
Latest Market Insights
Q4 Outlook 2022: Winter is coming
- Winter is coming to the financial markets as central banks are tightening their grip. How spring will look is still a question.
European energy crisis: it will get worse before it gets betterThe winter in Europe will be tough, but whether the result is political chaos or sustainable, innovative solutions is still undecided.
A difficult and volatile quarter awaitsAs the year draws to an end, commodities continue to be at centre stage of the world with growth pockets political uncertainty.
The bright side: crises drive innovationThe positive spin on crises is that they come with solutions. It is worrisome that deglobalisation may be a response to this crisis.
Green transformation in China: renewable energy and beyondGoing green, China needs to span numerous energy sources to ensure stability, as every source comes with a challenge.
Asia: Intermittent solutions, but a faster renewable adoption curveAsian energy supply is being squeezed. This and the adoption of renewables may change the investment sentiment in the region.
FX: A Fed thaw needed to deliver a sustained USD turn lowerThe US Dollar can keep momentum when the Federal Reserve continues to tighten, leaving the rest to play to their drum.
Autumn can become ugly for equities and bond holders. Comfort for Dollar longsTechnical analysis suggests that equities could face a tough Q4 as could fixed income. US Dollar positions could provide some upside.
The next stock market sector to watch, with stocks going nuclearAs the world scrambles to find affordable, sustainable energy, nuclear is getting attention from politicians and investors alike.
The crypto space is getting cold when the hype disappearsCryptocurrencies face a winter of their own as retail investors and governments are asking tough questions.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)