The FTSE 100 has been climbing higher yet again.
Source: Blackwell Trader (FTSE 100, D1)
The ascending triangle has been in play for some time and markets have looked to capitalise on it on a regular basis.
Current market sentiment has certainly been positive for equity markets, but unlike the S&P 500 and the Dow Jones, the FTSE 100 does not act like them at all. In fact, it peaked on 3 separate occasions over the last year. Markets are expecting the FTSE to break out, thus far though it has remained fairly constrained as the economic situation can be a bit chaotic at times and people are still a little uncertain on the Eurozone.
Looking at the indicators, the RSI is showing signs of overbuying which is quite serious for the FTSE 100 as many will notice it rarely touches, and when it does, it looks to pull back. The current top is certainly looking poised for a corrective pullback; especially when considering its sitting on resistance currently.
When looking at the stoch as well (as seen below) we can clearly see that momentum is certainly on the side of the buyers, with the current momentum putting pressure on the high, but these peaks are rarely sustained and certainly this push looks set to lose some steam at least in the short term.
Source: Blackwell Trader (FTSE 100, D1)
Further movements higher are certainly restrained, with the only resistance level currently at 6860.00. Support levels are found at 6796 and 6713, it's likely though, they will only act as support in the medium term before the FTSE looks to find a foothold in the current market.
Source: Blackwell Trader (FTSE 100, D1)
When playing the FTSE its key that you don’t jump in at the top, but instead wait for the candles to form over the next few days. Look for conformation! Do not conform to the notion that you can time the market as it’s a recipe for disaster. I will be looking for a further bearish candle on the opening of the market before jumping in, as an ascending triangle can jump higher and lead to much higher highs.
So while this is a good trade, don’t look to jump in early. Wait till we see a further candle before making the plunge into the FTSE as the triangle is starting to get tighter and tighter, and a jump higher or lower may certainly be on the cards sooner rather than later.