News & Analysis

COTD: FTSE100

January 20, 2021

FTSE100 – Point & Figure

The FTSE 100 looked to ride the tailwinds of positive sentiment sweeping through US markets today but instead failed to maintain a reasonable start, ending the session down and 7 points in the red. However, the longer-term picture looks brighter for the Index as we study the latest point & figure chart shown above.

Following a series of buy signals, we see the latest trend backed by a bullish support line and appears relatively strong for the time being. Arguably, present demand seeks to recoup last year’s downturn and return to pre-COVID-19 levels. If we examine some of the potential price targets, this idea gains more traction.

The initial market shock around the low of 7350 gave us a downside target of 5000, using the vertical count method. Interestingly, the market sold to this exact level and has risen ever since. We then see price action produce two consolidative periods, each providing the upside targets of 7750 and 8000 in-line that would steer the Index towards levels last seen before the pandemic. At the time of writing, both potential targets remain valid.

Historically speaking, current P&F levels around 6550/6600 tend to cause some congestion with supply and demand, so the FTSE 100 may be in for a bumpy ride in the short-term. Above this region, there could be more impulsivity without any apparent signs of price resistance at this stage.

By Adam Taylor CTEe

.@AdamDavidTaylor

Sources: Go Markets, Meta Trader 5, TradingView, Bloomberg

Disclaimer: The articles are from GO Markets analysts,  based on their independent analysis or personal experiences. Views or opinions or trading styles expressed are of their own;  should not be taken as either representative of or shared by GO Markets.  Advice (if any),  are of a ‘general’ nature and not based on your personal objectives, financial situation or needs.  You should therefore consider how appropriate the advice (if any) is to your objectives, financial situation and needs, before acting on the advice.  If the advice relates to acquiring a particular financial product, you should obtain and consider the Product Disclosure Statement (PDS) and Financial Services Guide (FSG) for that product before making any decisions.

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