FTSE 100 Flirts with Key Fibonacci Ranges

FTSE 100 Forecast:

• Fibonacci ranges on FTSE 100 are displaying key spots of potential help and resistance
• Resistance potential stays round 6200, a spot of prior swing help
• MACD stays under the zero line however is the crossover a sign that the pattern could reverse?

FTSE 100 Finds Resistance at Key Fibonacci Ranges

Whereas the reopening of the financial system has supplied some reduction for bulls within the FTSE 100 index, patrons don’t seem like fairly as assured as these in the Dow, S&P 500 and different main indices. Regardless of a robust reversal from the March 2020 lows, Fibonacci ranges proceed to information help and resistance ranges which has helped to cap the four-month advance , regardless of the numerous momentum that was beforehand driving the transfer.

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The month-to-month chart under highlights Fibonacci ranges from three main strikes. The primary Fibonacci retracement (pink) represents the main transfer from the April 2009 low to the Might 2018 excessive. The second Fibonacci retracement (blue) is plotted between the August 2011 low and the Might 2018 excessive, whereas the third Fibonacci retracement (purple) is taken from the shorter-term transfer spanning from the Might 2018 excessive to the March 2020 low.

FTSE 100 Month-to-month Chart:

Chart Ready by Tammy Da Costa, IG

MACD Stays Under the Zero Line

From a technical perspective, present value motion has seen momentum shift from the energy on full show in late-March via Might. In June, FTSE value motion ran right into a confluent spot of long-term resistance and since, patrons have been thwarted and new highs have needed to stay on wait. Correspondingly, a variety has shaped as proven on the four-hour chart under.

In the meantime, the Shifting Common Convergence/Divergence (MACD) indicator, which helps to measure each the momentum and the path of the pattern, means that the whereas costs stay under the zero line, suggesting that the FTSE could also be oversold, bulls could start to exert strain, as indicated by the MACD crossover.

FTSE 100 Four Hour Chart

Chart ready by Tammy Da Costa, IG

Trying Forward

The bullish transfer that spanned from the March lows into Might ran right into a batch of resistance ranges which have since held patrons at bay. Since that longer-term resistance has come into play and because the vary checked out above has continued to construct, the potential for a break, in a single path or the opposite, has appeared to align with ongoing fears surrounding the coronavirus pandemic, Brexit negotiations and, extra just lately, rising tensions between the UK and China. The truth that imply reversion has built-in highlights the acrimony round present occasions; however the potential for a bearish transfer can’t be dominated out, provided that sellers proceed to retaliate, apparently decided to push costs to help.

For bulls, a break above the psychological stage of 6200 and above 6217, the 38.2% retracement of the long-term transfer, could result in a breakout potential in the direction of 6318.2, the 50% retracement of the secondary transfer, which can assist to type a brand new stage of resistance.

Opposite to this, a break under the psychological stage of 6100 and additional, under 5981, the 38.2% retracement of the short-term transfer, could end in deeper downward strain, with 5942.4, the 61.8% Fibonacci stage of the secondary transfer, coming in as doubtlessly deeper help.

What do Retail Merchants Suppose?

IGCS exhibits that, on the time of writing, 70% of retail merchants are holding lengthy positions within the FTSE 100. We sometimes take a contrarian view to crowd sentiment, and the actual fact merchants are net-long means that costs could proceed to fall.

— Written by Tammy DaCosta, Market Author for DailyFX.com

Contact and comply with Tammy on Twitter: @Tams707