With a number of global indices having fulfilled my long-term upside targets recently, it is time to reconsider whether my current target on the FTSE, at 6922, may need to wait for another day. In the meantime, however, my recommendation to stay long remains in place.
Most global share markets reacted negatively to the sharp fall on the Dow Jones early last week, and this headwind will remain now that both major US indices have fulfilled their upside targets. My recent FTSE notes have highlighted the isolated resistance at 6775 – caused by the line representing a 12.5% rise from the low last June – and this hurdle must be overcome soon if the index is to hit 6922 this time around.
The theory used in my market analysis has already indicated short positions be opened on the Dow, S&P 500 and German DAX indices. A further break below 6491 would indicate the FTSE has also entered a corrective phase, and should be used as the short-term trigger for activating stop-losses and opening outright short sales.
Recommendation: Stay long. Lower the target at which to take profit to 6775. Stop-losses should be raised marginally, and activated on a break below 6491. Furthermore, outright short sales may be opened on momentum below 6475. The initial target will then become 6251.