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FTSE shows resilience

Price at time of writing – 6583.

At last night’s close, the FTSE had declined just 39 points since last week’s update. 

This is a surprisingly resilient performance given the volatility witnessed on many global equity markets over the same period. Nonetheless, there have been no triggers to suggest an amendment to my current short recommendation. For the time being, my downside target remains 6294.

Yesterday’s intraday low (which also marked the intraweek low) was measured at 6507, and arrived at a level deep within my support band defined as 6491-6556. Last week’s update highlighted how this same band has become the ‘centre-of-gravity’ within the FTSE’s year-long trading range. This remains the case, even if the index were to probe lower to its next line of support at 6294.

My target at 6294 is determined by two, independent Gann-theory indicators. Firstly, it will fulfill a typical 8.33% correction from the recent high. Supporting this outcome is the rising time-angle originating from the unique low in March 2009. This time-angle is rising at a rate of three points every two calendar days, and will intersect the 6294 line around 5 May. In practice, however, this could occur anytime beforehand. A break above 6775 remains the early signal that the year-long trading range may be coming to an end.

Recommendation: stay short, or sell on any further rise to 6920. Target 6294. Stop-losses remain unchanged and triggered on momentum above 6975.

FTSE 100 chart

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