FTSE rally likely to fade
Friday saw the FTSE 100 rally heavily following an unexpected shift by the Bank of Japan. This took us back through the 6070 resistance and, set within the wide swings of this five-month pattern, it is clear that this move does not necessarily mean that the worst is over.
We would need to see a close back above 6324 to gain any confidence of a wider recovery. On the daily timeframe, the stochastic oscillator is now overbought and extending towards the levels that have capped each of the last three rallies. As such, while we are clearly within an uptrend on the lower timeframes, this rally is expected to turn lower within the coming days.
The consolidation seen this morning looks relatively bullish and a closed hourly candle above 6128 would provide a bullish outlook for the day. However, with such a strong move on Friday, an hourly close back below 6093 would signal a more bearish view for the day.
Resistance levels of note are 6152, 6174 and 6200, where initial support levels are 6070, 6024 and 6000.