Technical Analysis on the FTSE100

Wednesday, 24th October 2018 09:17 - by Rajan Dhall

The FTSE 100 has been struggling in recent days and this makes technical levels very important as market participants look for support levels. I always start with the higher timeframes to look at the bigger picture and the drill down into the daily. The weekly chart below suggests that unless we break the 6869 level we should all remain calm.

If we do, however, this will make a new wave low which is an indication that we might just have a bear market on our hands. The last time we made a lower high and lower low was back between 2015 and 16 the market pulled of around 22% from the high but managed to recover. Traditionally when we do make a new wave low we do retrace to make a lower high before the pattern finished, so if the break of 6869 does happen hopefully we won't see a freefall in prices.

On the daily chart below, it doesn't look like the bad times are over just yet. The shooting star candle pattern from 2 days ago suggests we could still be heading lower and I have put in 2 support levels at 6689 and 6873 where price has been supported in the past. Another bearish signal is the break to the downside of price from the downward sloping channel, interesting price retested the channel bottom and rejected it to move lower just above 7000. We could still see some more bearish action in the coming days/weeks but keep an eye on the levels on the chart as if we get a firm rejection (support) and maybe resolution from China and America we could see a nice price support pattern.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.