FTSE 100 Forecast: Index Continues to Grind Back and Forth

Christopher Lewis

I believe at this point you are more likely than not going to see choppy and destructive behavior more than anything else.

The FTSE 100 rallied a bit on Tuesday to reach the 7500 level, but it is worth noting that we have seen quite a bit of compression as of late and volatility. This is a chart that is getting ready to see a potentially big move, but we need to define which direction we are heading in, and I believe we will see that in the next couple of daily candlesticks.

If you squint, you can make out an inverse head and shoulders pattern. If we do break out above the neckline, the theoretical target would be 7800. This would be a “risk-on” type of move, but I do not think that’s as likely to happen. Ultimately, you should also pay attention to the 50-day EMA underneath, because it has offered nice dynamic support. Underneath there, we have the 200-day EMA rising, so it all comes together for support.

Alternately, you could make an argument for a down-trending line that we are paying close attention to, so we could drop down to the 7400 level, possibly even the 7200 low water lead. The market has been extraordinarily volatile, and that typically does not bode well for buyers. That being said, it’s worth noting that every time we have fallen, there has been a significant push to the upside in an attempt to recover, so I think we will continue to see a lot of compression and we are due for some type of expansion move.

The candlestick for the trading session on Tuesday is rather bullish-looking, but it also is worth noting that there’s a lot of noise just above. Because of this, I think we will continue to see more confusion than anything else. This is a market that had been in a massive uptrend for a while, but we are starting to see a lot of confusion, so at this point, it’s likely going to be a situation where you need to be cautious with your position size, and of course risk management. I believe at this point you are more likely than not going to see choppy and destructive behavior more than anything else. However, the market will continue to build up pressure in order to make a decision.

FTSE 100 Index

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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