Is the FTSE 250 set to finally break from four-month consolidation?
FTSE 250 breaks higher despite lockdown fears, but will this move finally bring the end of a four-month consolidation phase?
FTSE 250 outperforming despite the lockdown concerns
Boris Johnson is expected to bring about a fresh batch of localized lockdowns in the north of England today, with the rise in coronavirus cases in student cities putting pressure on the healthcare system. However, despite the fears of what such lockdowns could do to the UK economy, we have seen the FTSE 250 push into a fresh four-month high today. To some extent this is a reflection of the resurgence in value, with many travel-related stocks doing particularly well of late. From a long-term perspective, the FTSE 250 breakout points towards the potential continuation of an uptrend that has been stifled since the end of May. Instead we have seen the index consolidate as we await the next leg higher. This latest break could be the beginning of that bullish breakout, but comes at an interesting time. Given the ongoing fears around the economic fallout of another swathe of lockdowns, there is also a good chance we are looking at a move which could be simply the latest upward move within a long-standing consolidation phase. As such, the reaction the 18447 resistance level from May will be critical in determining whether we reverse or breakout from here.
From an intraday perspective, the hourly chart highlights just how rapid this recent ascent has been, with October representing an extremely profitable one for bulls thus far. The key swing-low of 17942 needs to be broken to bring about a more bearish outlook, with further short-term gains likely until then. With that in mind, continued upside is expected, but the reaction the impending 18447 level proving critical in determining what sentiment looks like from here on in.
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