At the beginning of the week we were cautious that a pullback could be on the cards here in the FTSE. We obviously were not the only ones as demonstrated by several breaks of the trend support line. However, each time we spiked down, we recovered to close back above this line. Today has seen us gap higher which places yesterdays high at 6968 in the support column. If this holds then we are on the cards to test our long term resistance at 6337.5 which is also a gap created back in January.
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.
When a market opens above the previous days range we say this has created a gap or window. If a market is truly healthy then this gap should hold as support and conversely as resistance in a market that has fallen.
Summary
This is day three without needing to alter the comment.
We have been a bit cautious here over the last few sessions and we were not the only ones as demonstrated by yesterdays shake out. With the recovery though we are now wondering if we can in fact make our original objective up at 6337.5. We have only have our recent high at 6278 to take out for this to be back on the cards. Yesterdays low at 6139.5 now takes on an important support roll.
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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