The FTSE gapped higher on Friday and after defending Thursdays high as support we pushed on to take out our objective at 6337.5 that had been in place for some considerable time. After reaching a high of 6359.5 we slipped back to close at 6315. This gave us a big upper shadow probably due to some profit taking. Early trade today has seen us open a little firmer so all looks well at the moment. There is potential for Bearish Divergence on the RSI but whilst we are holding above 6268 we have no real worries. Our Trend Support line has been re drawn and comes in at 6214.
Indicators in Play
Trend Support Lines are probably the most basic and easy to understand tools in Technical Analysis. Its just a matter of joining higher lows together with two and some prefer three points of contact. The more dips that touch the line and the longer the support has been in play increases the potency of this type of trading tool.
Summary
We have been Bullish here for some time but now that our long term objective has been reached we are going to sit back for the moment and reassess the situation. We would be happy to hit the buy button again should we test and hold gap support again at 6268.
David has been
analyzing and trading the worlds financial markets for the past 25 years. After an initial grounding with Mercury Asset Management and Warburg Securities he went on to set up his own brokerage operation in London. Since then he has appeared regularly on Bloomberg Television and been involved in providing analytics on behalf of some of the worlds major exchanges. He is also a member of the Society of Technical Analysts.
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