- FTSE 100 out of technical pattern, still intact on pullback
- Technical considerations moving forward following the pattern breakout
- Sterling not having much influence recently given choppy trading conditions
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On Friday morning when we were last discussing the FTSE 100 , it was breaking higher above the neckline of the inverse head-and-shoulders pattern it developed over the couple of weeks prior. The depth of the pattern points to a measured move which just about equals the footsie reaching its previous all-time highs (7354) recorded in the middle of January.
We will run with the inverse H&S formation so long as the footsie doesn't drop below the neckline and rising trend-line from the head of the pattern. This gives the index some wiggle-room for now. A break below the Feb trend-line would be reason to believe we could see another thorough testing of the 7100 line or worse, and that the recent advance may be the development of a lower high from the record highs.
We've been discussing sterling a bit in recent posts given its strong inverse correlation to the 100. It's had little influence the past few sessions, with choppy trading dominating not only GBP, but the FX market as a whole. A strong move one way or another, though, would likely have a material impact on the FTSE. We'll keep an eye on it, but mostly for now we'll run with the pattern present in the stock index itself and worry about the pound secondarily.
FTSE 100: 2-hr
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---Written by Paul Robinson, Market Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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