Technical Update - Volatile FTSE in correction mood. Can it move higher?
Kim Cramer Larsson
Technical Analyst, Saxo Bank Group
FTSE 100 correction doesn't seem to get traction. Strong resistance around 7,088
FTSE 250 struggling to test key resistance at 17,822. Bear trend could soon resume
The very volatile FTSE 100 seems to be in corrective mood testing the 0.382 retracement at around 7,015. However, big test is resistance at around 7,088. A close above could send the Index to 7,205 possibly 7,341.
Divergence on daily RSI has suggested a correction for some time but the mood could soon turn sour again. If RSI closes back below 40 the bear trend is likely to resume. It would be confirmed with RSI breaking its rising trendline.
IF FTSE 100 closes below 6,787 it could lead to heavy selling pushing the index to support at around 6,484-6,397.
FTSE 250 has broken bullish out of its falling channel. The Mid-cap Index needs to close above resistance at around 17,822 for further upside to next resistance at around 18,494. If FTSE 250 is failing to do just that the bear trend could resume.
A close below 16,520 could spark a sell-off down to 16K possibly lower. 15,194 would be next strong support. RSI showing divergence but still in negative sentiment it is crucial to look at the trendlines. If RSI on daily breaks below its lower rising trendline followed by a close below 40, and the Index breaks below 17,033, the bearish trend has resumed, and new low should be expected.
The down trend is stretched however, indicated by divergence on both daily and weekly time period. Bottom line market seems to in a limbo at the moment.
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