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CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

FTSE 100 technical outlook: running into a zone of resistance

FTSE 100 nears a zone of strong resistance as the UK big board is up nearly 14% in the last three months.

Source: Bloomberg

The FTSE 100 continues its recent outperformance at the start of the new year with the indices looking set to challenge levels last seen around one year ago.

The FTSE 100 is 0.60% higher at 7,614 and as we approach the US open, helped by strong gains in miners:

The FTSE 100 has rallied the best part of 14% since the 'Liz Truss’ low in mid-October last year and while it may threaten the May 2018 all-time high at 7,910, the indices will need to break through a strong area of overhead resistance.

Looking at the monthly chart, a confirmed break above 7,687 would leave the all-time high in play.

FTSE 100 monthly price chart: January 5, 2023

Source: TradingView

Looking at the daily chart and a bullish ‘cup and handle’ formation is currently being made which suggests that the all-time high is within reach. In addition, a bullish ‘golden cross’ moving average crossover printed at the end of last year, another bullish technical signal. Support for the indices is at 7,410 ahead of 7,295.

Retail traders remain net short

Retail trader data shows 17.16% of traders are net-long with the ratio of traders short to long at 4.83 to 1.The number of traders net-long is 1.13% lower than yesterday and 32.23% lower from last week, while the number of traders net-short is 1.51% higher than yesterday and 19.25% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests FTSE 100 prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger FTSE 100-bullish contrarian trading bias.

FTSE 100 daily price chart: January 5, 2023

Source: TradingView

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.


This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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