Over 40 years’ heritage
185,800 clients worldwide
Over 15,000 markets

FTSE continues to stagnate

Price at time of writing – 6520.

The FTSE has fallen 169 points since my update two weeks ago, and a slight increase in downside momentum has occurred. 

The general stagnation of the index remains, however, and only a break above 6920 will open the door to a new phase of upside dynamism.

I repeat my long-term chart of the FTSE today, but with a few add-on time angles to emphasise the repetitive nature of the patterns. It can be clearly seen on the chart that the major advances and declines over the past 20 years were fulfilled at a very similar rate. The rate of decline drawn from last year’s high is, at this stage, just for effect. It is worth reminding ourselves too that, in the Gann theory, a triple-top is amongst the most influential of all chart patterns. Should the index fall sharply from 6920 – the level that measures a 100% rise from the major low in March 2009 – there is no doubt a long-term triple-top will have formed. This is one of the prime reasons behind my caution over the past three months.

Nonetheless, major resistance levels are there to be broken. Any break above 6920 would clear the way for a major new upside advance, and we should prepare our trading strategy for any such outcome.

Recommendation: stay short, or sell on any further rise to 6920. Target 6293. Stop-losses remain unchanged and triggered only on momentum above 6975.

FTSE chart

The information 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 Bank S.A. 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 and as such is considered to be a marketing communication.

Find articles by analysts