The FTSE 100 is at a significant point

So far, the FTSE 100 has stayed within its trading channel, but there are signs it could be plotting to break out. John C Burford examines the charts.

On Wednesday, I outlined my thoughts on the technical position of the FTSE. It had made a new high and was backing off that high while travelling along my solid tramline pair.

This morning, the market is at an interesting juncture. I therefore thought I would follow up on Wednesday's analysis.This was the picture on Wednesday:

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.
13-11-20-MWT-3

The nature of the move off the 6,818 high suggested a corrective move, not a new downtrend yet. This move consists of several highly-overlapping waves. And it is the deep penetration of each wave into the area of the previous wave that gives the game away.

That is why I suggested that the odds slightly favoured a move up out of the tramline pair, rather than down.

Advertisement
Advertisement - Article continues below

To cancel this assessment, I would need to see a sharp move down into new lows. That has not happened (yet).

Will the market break through my tramline?

13-11-22-MWT-2b

Late on Wednesday, the market rallied to the upper line and made another hit. But then it was knocked down again.

This shows the power of tramlines upper tramlines represent strong resistance to rallies.

So the market decided to keep trading between the tramlines and no trading signal was flashed. Generally, when the market is trading between your tramlines, no new positions are indicated.

But then, the market girded up its loins. And this morning it is knocking on the door of the upper tramline again.

Will it break through this time? And if it does, will the break be a head fake or a genuine move into new highs above 6,918?

Advertisement
Advertisement - Article continues below

The fact of the matter is, with six touch points on my upper tramline any break is sure to be significant.

Advertisement

Recommended

Visit/519524/how-my-2019-spreadbetting-tips-fared
Share tips

How my 2019 spreadbetting tips fared

Matthew Partridge reviews performance of his 2019 spreadbetting tips. This year’s winners include Bellway, JD Sports and Taylor Wimpey.
17 Dec 2019
Visit/519285/bettingon-politics-some-safe-labour-bets
Spread betting

Betting on politics: some safe Labour bets

Matthew Partridge outlines a few flutters on what should be safe Labour seats in the general election.
10 Dec 2019
Visit/518916/ds-smith-will-deliver
Spread betting

DS Smith will deliver: here's how to play the share price

Packaging group DS Smith is profiting from the online retail boom. Matthew Partridge explains how traders can play the share price.
3 Dec 2019
Visit/518908/betting-on-politics-28
Spread betting

Betting on politics: don't put your money on the SNP

Scottish voters are strongly opposed to another independence referendum, says Matthew Partridge. That opens up a few tasty punts against he SNP.
29 Nov 2019

Most Popular

Visit/520525/currency-corner-how-high-can-the-pound-go-against-the-euro-in-2020
Currencies

Currency Corner: how high can the pound go against the euro in 2020?

In the month in which we should finally leave the European Union, Dominic Frisby takes a look at the pound vs the euro and asks just how high sterling…
13 Jan 2020
Visit/520575/20-predictions-for-the-2020s
Investments

Where will markets be in 2030? Here are 20 forecasts for the 2020s

A lot has changed in the last ten years – stockmarkets soared, technology transformed our lives and politics has changed beyond measure. Here, Dominic…
14 Jan 2020
Visit/520338/how-much-the-state-pension-will-rise-by-this-year
Personal finance

How much the state pension will rise by this year

While Boris Johnson promised to hold a full budget within 100 days of his election victory, many of the details of next year’s state pension increases…
10 Jan 2020
Visit/520553/money-minute-wednesday-15-january
Economy

Money Minute Wednesday 15 January: UK inflation and house prices

In today’s Money Minute, we look ahead to the latest UK inflation and house price figures, plus we have Germany’s GDP data for 2019.
15 Jan 2020