Can FTSE break out of sideways oscillation?

Price at time of writing – 6865.

In my market updates I have generally recommended a degree of caution over the past couple of months.

I am conscious that some global share indices – notably in the US – have already achieved my long-term upside targets. I have deliberately recommended a neutral/sell bias on the FTSE too, even though the index has just failed to fulfill my long-term target at 6920. That cautious tone continues as we grind through these higher-risk times.

The FTSE has done nothing but oscillate sideways since trading to within 44 points of my 6920 target in May last year, and has underperformed against most leading equity indices since. However, it appears we may finally see the index garner enough momentum to achieve that target this time around. The FTSE stood just 55 points shy of this resistance at last night’s close.

The target at 6920 is derived from a series of important percentage lines that cluster around this level. Importantly, realisation of this target will have fulfilled a 100% rise from the unique low in March 2009, taking the index back to its all-time high at the turn of the millennium.

Recommendation: stay short, or sell at 6920. Target 6293. Stop-losses can be introduced and set to trigger on momentum above 6975.

FTSE chart

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