FTSE Still Has More Ground
Alex Gurr | Aug 27, 2014 03:33AM ET
The FTSE 100 has been looking very solid as of late as it climbs the charts, and markets are looking somewhat positive in the current economic climate; even though the pound has taken a massive dive in recent weeks.
At present there is a lot of go forward in equity markets, and not just in the FTSE. Overnight we saw the first close over the 2000 point level in the history of the S&P, perhaps these are strong signs of more strength in the current market climate. There is certainly the prospect of rate rises which will have a strong effect on the markets in terms of confidence.
When I look currently at the FTSE 100 it’s clear that the ranging motion has more to come when it comes to movements along the chart, but at present markets are aiming for the current resistance level at 6871.00; this level is looking like a ceiling in the current market, and a breakthrough seems very unlikely. I say that based on the fact that despite the prospect of further interest rate rises, the UK economy seems to be slowing when it comes to further growth projections, with the IMF lowering its forecast from 3.7% to 3.4%.
Currently, when looking to trade the FTSE, I find the slow Stoch with a 60 day time period as the best for seeing ranging formations in the market. Currently momentum is heavily on the buyside,but we have not seen the slow Stoch from pushing through into overbought territory. I would look to see it push higher to the current ceiling in the market, and that would put it in overbought territory and give a window to come in and short the FTSE.
Overall, the FTSE is looking attractive as of late, and market participants should be aware of the ceiling that is in the market, and the probability of an attractive short over the medium term.
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