FTSE 100: where will the index finish in 2020?

Our chartist makes his predictions for the UK index at the end of an extremely difficult year.

FTSE for Thursday (FTSE:UKX)

Financial volumes through London confirms that most folk are spending time avoiding Covid-19, the markets and Europe, but to be fair, markets appear to be ending the year in the usual way, with a whimper of relief.

Last year, the final full day of trading recorded a £3.2 billion turnover in London. This year, the final day calculated at £2.9 billion traded through the exchange, a minimal swing given the usual daily variance.

On the final day of trading last year, we included a ‘print this out’ section suggesting trigger levels to watch. 

Particularly nasty was our comment against Wall Street, suggesting a change of underwear if the index fell below 27,000. The ensuing reversal to 18,000 proved memorable.

• Why reading charts can help you become a better investor

Similarly, the S&P was given with a reversal trigger at 2,930. It fell to 2,200 points. 

France triggered 5,380, finally halting at 3,640 points, while Germany triggered at 12,470 and bottomed down at 8,250 points. And along came the FTSE 100, triggering at 6,740 and finding a bottom at 4,890 points. 

For fun, we’ve put together a little table below. As you can see, Covid-19 provided around one-third reversals in Europe and the US, the FTSE being a real surprise by failing to experience such an exaggerated drop compared with other major markets. 

This year, we’re not going to attempt a similar feature, simply due to markets being all over the place in the period since the final Covid-19 drop in mid-March. 

There’s no doubt markets want to recover strongly, but negative news could promote some very fast reversals. 

In the case of the FTSE, only above 6,750 or so shall we dare to believe recovery to be genuine.

As for today, a half day of trading, below 6,550 looks pretty capable of reversals to an initial 6,521 points. If broken (visually unlikely), our secondary works out at 6,465 points.

Alternately, above 6,604 tends to suggest the possibility of the index ending the year on a high note. 

Above this level allows strength to an initial 6,643 with secondary, if bettered, a rather more exciting 6,695 points.

Our best wishes for 2021. 

Source: Trends and Targets. Past performance is not a guide to future performance

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or interactive investor will be responsible for any losses that may be incurred as a result of following a trading idea.