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It is not yet an outright buy, however, as the index must first overcome very strong resistance waiting at 6922. My recommendation remains neutral.
Last week’s update touched on the fact the FTSE had managed to break above isolated resistance at 6775, a level that had kept the index checked for much of the past year. Overcoming this hurdle now clears the way for the FTSE to home in on my long-term target at 6922; a target that was very nearly fulfilled in May last year and requires a further rise of just 49 points. A successful challenge of this level would complete a 100% rise from the unique low of March 2009, and place the FTSE just 29 points shy of its all-time high at the turn of the millennium.
Today’s chart returns to the long-term version, dating back to the origins of the bull-market in July 1984. This coming July will mark the 30th anniversary of this remarkable period for equity investment, and, when the FTSE hits my 6922 resistance level, will mark a return to a level that represents a 600% rise from that very important low.
Recommendation: neutral. Traders may sell the index short at 6922, with an initial target of 6775.