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FTSE could head to 6680
Having seen the index shed more than 200 points in June so far, the question is now whether the bounce this morning is the beginning of a turnaround. For the moment, so long as daily stochastics are still bearish, I would remain inclined to think more downside is the order of the day. The region from 6800 to 6850 will be a key point in determining where the market heads next – this area has provided resistance in the past few sessions, so its recovery will be crucial.
Those looking to jump back on the downside should be careful, since the index is now oversold for the first time since mid-December 2014. Thus caution is the prudent course, with bears waiting for an indicator such as stochastics on the hourly chart to reach overbought levels, rather than rushing in too early.
The index now finds itself at the 200-day simple moving average (6747), which may provide a point at which a bounce can begin. A failure to hold this would mean we head towards 6680 in the first instance.