FTSE drops from highs down to key support

<p>The FTSE 100 index (daily chart) has dropped sharply down from major resistance near its long-term highs to key support around the 6650 level, before […]</p>

The FTSE 100 index (daily chart) has dropped sharply down from major resistance near its long-term highs to key support around the 6650 level, before bouncing. Once again, the 6675-6685 resistance zone has held strongly as the UK equity index made a high of 6875 last week before turning sharply back to the downside from resistance. That high fell short of re-testing May’s 6896 peak, which was almost a 15-year record high for the index. Though the FTSE is still entrenched in a long-term bullish trend, the current drop has established more than a two-month low and marks the most substantial pullback thus far since March.

Having recently fluctuated under resistance near its long-term highs for more than two months, the index had been well overdue for a more significant pullback down to at least the 6650 support level, but potentially even lower. Now that this has occurred, the FTSE could enter into a further bearish retracement or correction phase if the 6650 level is breached significantly to the downside. In the event of a major downward breach of this nature, the next key support target resides around the important 6500 level last hit in mid-April. To the upside, intermediate resistance on a further bounce resides around 6800.



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