- The FTSE 100 still trying to hang onto support, but…
- Doing so with lower highs, thus developing a descending wedge
- BoE on Thursday
Since last examining the FTSE on Thursday , it has gone -nowhere. The index continues to hold support, and as we said in our last post, "support is support until it isn't". The market has been able to hold the ~6955/18 zone, but it's failure to garner any buying interest despite its ability to hold up is putting the FTSE in a potentially precarious spot.
The UK index is treading below the 'Brexit' trend-line, a development we noted as not outright bearish given the steadfast level of support it currently sits on. However, since the October peak we have a pair of lower highs which is helping carve out a descending wedge. These patterns are generally regarded as bearish due to sellers stepping in at decreasing levels, but, as with any triangle/wedge formation, we must wait for a breakout before running with it.
A daily close below 6918 would put buyers on their heels while giving sellers reason to press more aggressively. On a sustained break, the first level of support we will have our eyes on comes in at a lower parallel, ~6840 at this time. The first notable swing low doesn't arrive until the 9/27 swing low at 6769.
Should the FTSE continue to hold support we will need to be patient in determining its next path. A more complete descending wedge could take shape, and while it could still be a sign of a top, it may also break in line with the prevailing upward trend over the past few months.
FTSE 100: Daily
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Head's up: On Thursday, at 12:00 GMT we have the release of the BoE's decision on rates, adjustments to its asset purchase facility, and the quarterly inflation report. There are no expectations for any changes, likely making language out of the CB the market's primary focus.
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---Written by Paul Robinson, Market Analyst
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