Signs of a pause in Chinese markets should be a cue for the same in the FTSE.
The FTSE 100’s ultra-clean rising trend line from December lows suggests it still has a lot going for it on the upside for the near term. The rising 21-day exponential average confirms encouraging medium-to-short term sentiment. This should take precedence over the slower-to respond 200-day trend, which is drifting lower.
But are these signals enough? In the same way that it may be too soon to call a definitive rebound in Chinese growth, it may be too soon for the FTSE to re-take critical highs from last year.
The benchmark (and derivatives like City Index’s UK100) is still rising into formidable resistance comprised of highs that were fiercely rejected in the autumn. Furthermore, the Stochastic Momentum Index (SMI) oscillator has recently failed to confirm the strength of recent gains. Note the market’s 2019 high of 7487 on Tuesday occurred when the SMI had already rolled over from overbought readings. A line of lessor resistance, pun intended, might well lead lower. The clearest nearby support may be 7370-7365, the range expressing highs on 21st and 22nd March.
UK100 – daily [17/04/2019 13:35:04]
Source: Tradingview/City Index
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